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With the government keeping an eye on the general election that must be called by 24 August 2018, in its latest economic update, RHB predicts that the upcoming Budget 2018 may hold many benefits for Malaysians.
It is predicted that the budget may include salary increases and better allowances for civil servants, an increase to the lifestyle tax relief from RM2,500 to RM2,700 per year, and an increase in tax relief for medical expenses, disability and early children’s education.
The RHB economic update says: “We believe the budget would likely continue to be people-centric, and focus on developing the wellbeing of the rakyat to ease the burden of the rising cost of living.
“Hence, we believe this budget would likely provide more goodies and assistance to help the lower-income segment, given the lingering issues such as the rising cost of living and housing affordability, which continues to affect the people at large.”
The RHB report predicted Budget 2018 will tackle the issue of the rising cost of living.
These include a raise in special assistance of RM500 to public servants and RM250 to government retirees announced in Budget 2017.
RHB also expected 1Malaysia People’s Aid (BR1M) recipients to get more cash as the allocation for BR1M is expected to increase from RM6.8 billion in 2017 to RM7.5 billion in 2018.
At the same time, subsidies to aid fishermen, rubber tappers and students are likely to remain, and salaries and allowances of teachers are likely to be increased, to encourage better quality teachers.
Other possibilities RHB saw in Budget 2018 include:
- The voluntary reduction in Employees Provident Fund (EPF) contributions is not expected to be extended to 2018, given the recovery in private consumption in the second quarter of this year.
- The government is unlikely to cut corporate and individual income tax rates for 2018.
- The government will likely increase its allocation for development expenditure.
- The government may implement reforms on pensions, which took up 10.4% of total expenses in the first half of this year.
- Expenditure on healthcare and education subsidies is expected to increase next year, coinciding with GE14.
- With Budget 2018 themed “Shaping the Future”, the government is expected to shift its focus from previous budgets (ie fiscal discipline) to one that emphasises the country’s aspirations for the next 30 years under Transformasi National 2050 (TN50).
- The government may likely place a lot more emphasis on economic development that uses technology – such as robotics and cloud computing – to make advancements.
- The government is expected to boost growth in the digital economy.
- Possible tax incentives for industries that pioneer into fields such as automation, robotic development, big data, and cloud services.
- The government is envisaged to provide further incentives for SMEs to further stimulate their growth.
Prime Minister Najib Razak, as finance minister, is expected to table Budget 2018 on 27 October at the Dewan Rakyat.
Photo / 123RF