Malaysian Prime Minister and Finance Minister tabled his first full budget themed “Economic Reforms, Empowering the People” on 13 October 2023. In the face of global uncertainties, the slightly expansionary Budget 2024 attempts to balance economic growth, fiscal discipline, sustainability, and the rakyat’s wellbeing.
The key takeaway from the 2024 budget announcement made by Prime Minister Datuk Seri Anwar Ibrahim is the continuity and follow-through from other recent policy statements: the Ekonomi Madani, NETR, NIMP2030, and mid-term review of the 12MP.
1. Revenue Breakdown
Of course, first of all, we have to look at where the money is expected to come from. Right?
Of course, first of all, we have to look at where the money is expected to come from. Right?
The subcomponent of tax revenue is estimated to show positive growth given better economic expectations, while contraction is seen in non-tax revenues amid reduced investment income collections. For this, corporate tax is expected to contribute the most to the coffer of the government.
2. Operating Expenditure
This really caught my attention: Debt service charges. What? Money used to service our national debts is eating up 16% of the total OPEX. For example, you're allocating 16% of your monthly salary just to service the interest of your loans.
Hmmm... 😔😔😔
Hmmm... 😔😔😔
3. OMG (Oh My GST 💫)
Obviously, we missed the revenue generated by Goods & Services Tax (GST) which was abolished by then Tun Dr. Mahathir during his second stint as our PM.
Of course, we can't deny that the difficult period during the pandemic has resulted in lower tax revenue for the country, but, GST does really help when people 'consume' as GST was the most effective way to generate revenue via consumption activities from all of us.
Of course, we can't deny that the difficult period during the pandemic has resulted in lower tax revenue for the country, but, GST does really help when people 'consume' as GST was the most effective way to generate revenue via consumption activities from all of us.
4. Increase in Services Tax
Following that, the increase in service tax from 6% to 8% may provide some breather in the near term, but this is insufficient to address the long-term structural debt problem.
And, based on the projection, the 2% increase of service tax next year would bring an additional of RM3.45bil, which I think is not much. Don't you agree with me? 😕
5. Government Debt Hitting the Ceiling 💣
From the initial 40% to 55% and to the recent period of 65% debt ceiling set by lawmakers in the country, it looks like we're very much on track to hit the limit very soon.
Should we raise it to 70% next? 💁💬
Should we raise it to 70% next? 💁💬
6. Cash Handouts (because I already forgot all the names)
Yes, since the first day, BR1M was being introduced more than 10 years ago, the name of such cash handouts has been changing along with the changing of government. In 2024, a staggering RM10bil was allocated for STR.
Are we addicted to this?
By the way, STR stands for Sumbangan Tunai Rahmah 💓
By the way, STR stands for Sumbangan Tunai Rahmah 💓
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