Unity Government Budget
The Revised Budget 2023 is significant as it is the first budget tabled by the new Unity Government after the 15th General Election. The revised budget sets a new vision for the future and aims to reset Malaysia as the country faces economic challenges. The Prime Minister and Finance Minister, YAB Dato' Seri Anwar bin Ibrahim presented a realistic picture of Malaysia's economy, emphasizing the need to restore fiscal discipline and address the country's high national debt.
3 Key Areas
Introducing the budget under the theme, Belanjawan Madani, the revised Budget 2023 reflects the principles of responsibility and having greater values to face imminent economic challenges in a globally uncertain environment. The revised budget has placed emphasis on three (3) key areas i.e., promoting a comprehensive and sustainable economy, reformation of institutions and good governance, and upholding social justice.
Government Revenue Gap
In this revised budget, taxation takes center stage to act as a driving force behind these three (3) key areas and ensure that the government is able to fund the projected expenditure of RM388.1 billion. This is especially so as we take note of the ambitious target to reduce the fiscal deficit in the medium term from the current level of 5.6% of Gross Domestic Product (GDP) in 2022 to 3.2% of GDP by the year 2025. As a result, taxpayers can expect a challenging compliance environment ahead as the government looks to fill the gaps in government revenue going forward.
Changes to the Tax System
The revised Budget 2023 proposes structural changes to the tax system in Malaysia, including the introduction of a Luxury Goods Tax, a Capital Gains Tax, and an excise duty on electronic cigarettes and vape products. The top 20% of Malaysian households will also face increased tax rates for income over RM100,000 to fuel government expenditure.
Diversifying Revenue Stream
The changes proposed in the revised Budget 2023 for diversifying government revenue streams are viewed positively, as Malaysia needs to meet the challenges of the future. Tax incentives for food security, technology development, and sustainable industries, such as electrical vehicles and carbon capture, are introduced and extended, providing opportunities for businesses in the Malaysian market.
Overall, the revised Budget 2023 introduces timely measures to restore confidence in the Malaysian economy and set the stage for growth in the years to come. It is hoped that the analysis contained herein would aid finance and business leaders in determining the best course of action ahead as we navigate through a 2023 filled with cautious optimism.