KUALA LUMPUR - Coming ahead of Malaysia's next general election, Budget 2023 is an attempt to balance the need to hand out immediate voter goodies against the country's long-term development.
Finance Minister Tengku Zafrul Abdul Aziz announced a raft of measures to help the bottom 40 per cent of income earners and the middle 40 per cent of earners to mitigate higher cost of living.
This includes cash aid of RM7.8 billion (S$2.4 billion) for the bottom 40 per cent of income earners, compared to RM8.2 billion allocated in Budget 2022.
The Finance Minister said the cash handouts would benefit around 8.7 million people.
A one-off payment of RM2,500, which is the highest in history, would also be given to households with five children or more, and with income of less than RM2,500 per month.
Lower-income households with a monthly income of RM1,169 and below would also enjoy an electricity bill subsidy of up to RM40.
With higher domestic inflation and cost pressures, pro-growth measures were also announced, including tax cuts for the middle 40 per cent of earners as well as small and medium-sized enterprises.
About one million resident individual taxpayers would enjoy a 2 percentage-point tax cut for taxable incomes of between RM50,000 and RM100,000 per annum.
For the taxable income range of RM50,001 to RM70,000, the rate will be reduced from 13 per cent to 11 per cent. For the RM70,001 to RM100,000 range, it will decline from 21 per cent to 19 per cent.
"With this special income tax treatment, tax savings for the middle-income group is up to RM1,000," said the minister.
This group – the middle 40 per cent – earns between RM4,851 and RM10,970 monthly.
Datuk Seri Zafrul added that the government will allocate RM1 billion to provide a one-off grant of RM1,000 to all registered micro, small and medium enterprises and registered taxi drivers, a move which is expected to benefit a million businesses.
The government has also allocated a whopping RM15 billion for its flood mitigation plan up to 2030.
This is part of a long-term strategy to adapt to climate change nationwide.
In the long run, the government intends to build dual-function ponds, dams and improved weather forecast systems.
Given that the agriculture sector is vital to Malaysia's economy, the government has allocated up to RM1.8 billion in subsidies and incentives for paddy farmers, fishermen and small farmers.
PwC Malaysia deals partner of economics and policy Patrick Tay Soo Eng said the budget has a political impact as well as long-term benefits for the socio-economic development of the country.
"In view of the upcoming election, Budget 2023 is a balanced budget targeting short, medium and long-term socio-economic goals for the country."