The Malaysian government will raid its investment funds and introduce new taxes to help pay for its rising expenses this and next year.
The biggest contributor will be state oil firm Petronas, which will hand over RM30 billion (S$10 billion) from its reserves for a special dividend next year, above and beyond its normal contribution to the Treasury.
The government expects to raise RM261.8 billion of revenue next year, which includes the Petronas dividend. Some of this will go towards settling tax refunds totalling RM37 billion which were left unpaid by the previous administration.
"We are grateful that Petronas, a company that has been run in an extremely prudent fashion, has been able to accumulate reserves which can be shared with the government without jeopardising its ability to invest in its future growth," Finance Minister Lim Guan Eng said in his maiden budget speech in Parliament yesterday.
According to the Finance Ministry's Fiscal Outlook 2019 report, the government is also expected to receive a higher dividend from sovereign wealth fund Khazanah Nasional amounting to RM2 billion. A one-off RM4 billion contribution will also come from the Retirement Fund (Incorporated), or KWAP.
Mr Lim also announced a slew of new taxes and increased some existing ones to boost revenue, saying: "To restore our fiscal health, the Prime Minister has asked Malaysians to be prepared for sacrifices for the nation."
These include a soda tax and a departure tax on air travellers - set at RM20 for those travelling to Asean countries and RM40 for those heading to other countries.
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Highlights of PH's first budget
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•RM37 billion (S$12.2 billion) in tax refunds to be paid, financed by RM30 billion special dividend from Petronas.
•Annual cash handouts capped at RM1,000 and limited to households earning RM4,000 or less monthly. The number of recipients will drop to 4.1 million from seven million, cutting expenditure to RM5 billion.
•Fuel subsidy of 30 Malaysian sen per litre will be limited to cars under 1,500cc and motorcycles under 125cc, with a maximum allowance of 100 and 40 litres each, respectively.
•A sugar tax of 40 sen per litre on drinks with more than 50g of sugar per litre beginning on April 1.
•Intra-city tolls frozen next year, with motorcycles getting free passage across both Penang bridges and the Second Link to Singapore.
•Annual casino licences will cost RM150 million, up from RM120 million.
•RM1.5 billion set aside to fund public housing.
Shannon Teoh
A new digital services tax - applicable to online-based suppliers such as Netflix - will be introduced from January 2020.
A 5 per cent real property gains tax (RPGT) will be introduced for all Malaysians, while the RPGT rate for companies and individuals who are not Malaysians or hold permanent residency will be hiked from 5 per cent to 10 per cent.
Stamp duty on transactions involving properties valued at RM1 million and above will also rise to 4 per cent.
Casino licence fees will be raised from RM120 million to RM150 million each year, while duties on casino revenue will be increased to 35 per cent.
The government also announced new measures to maximise revenue from its assets, including holding open tenders for its land sales and forming real estate investment trusts (Reits) around its airports' assets.
According to Mr Lim, "the world's first airport Reit" could raise as much as RM4 billion for the government coffers.
