KPMG: Budget likely to address costs of living
KUCHING: With the onset of the 14th General Elections soon, Budget 2018 will likely strive to be people-friendly and address the most pressing concern of the electorate majority, which is that of high and increasing living costs.
This sentiment was shared by KPMG Tax Services executive director Regina Lau, who noted that we may see direct impactive measures in the Budget such as allocations for one-off special cash allowances for targeted groups such as BRIM recipients, farmers, fishermen, pensioners and civil servants, to put cash directly into their pockets.
“With the Budget theme being ‘ Shaping the Future’, we may also expect measures to gear the economy and businesses towards greater innovation and use of modern technology to increase productivity, and e-connectivity to extend businesses globally,” she said in a statement.
“Shaping the future may also see yet more allocations for big infrastructure spending in opening up more regions by increasing accessibility, a strategy that has worked very well in China’s moves to escalate its economic growth.”
While we moan about how the weak ringgit costs us more in terms of imported goods and holidays abroad, Lau said the coming Budget may capitalise on the situation which is not expected to reverse in the short to medium term.
“Specifically, it is a good opportunity to increase foreign exchange earnings by encouraging and increasing exports and in-
With the Budget theme being ‘Shaping the Future’, we may also expect measures to gear the economy and businesses towards greater innovation and use of modern technology to increase productivity, and e-connectivity to extend businesses globally. Regina Lau, KPMG Tax Services executive director
bound tourism,” she added.
“Encouraging the manufacture and export of more higher valueadd products will help bring our economy to the next level, and in this respect the potential lies with SMEs which contributes some 37 per cent to the GDP, 18 per cent to exports and a whopping 65 per cent to employment.
“The coming Budget may therefore have specific measures to further boost SMEs and help them transition into the new global economy and the challenges that come with it.”
When asked on her thoughts about the call on the government to reduce taxes in specific sectors as well as enhance prospects of doing business, Lau said it was important to look at fiscal prudence and fiscal discipline.
“The man on the street is moaning about high costs of living which do not seem to be abating. At the same time, many businesses are moaning about the higher costs of doing business, more so with the minimum wage due to be reviewed next year and the Employment Insurance Scheme due to be implemented also next year.
“These issues are interconnected and reducing taxes is not the easy solution,” she affirmed.
“Taxes are the source of Government revenue to meet its operationalneedsanddevelopment expenditure. As it stands, with oil revenue still in the doldrums, the Government has set high collection targets from income tax and GST to meet its revenue goals, putting more pressure on businesses.
“Reducing taxes at a time when the Government is struggling to keep its budget deficit in check is a tall order,” she highlighted. “I believe that ceteris paribus, we should be looking at fiscal prudence, fiscal discipline.”
Lau said more allocations should go into capital investments which will build capacity for future income generation.
“Operational expenditure should be checked and reduced. When we have limited resources to spend, we should rein in non- productive expenditure and direct the spending into areas which will bring direct benefit to a larger segment of the community,” she said, adding it was “short term pain for long term gain”.
“I n addition, there should be serious efforts to combat excesses and wastages. This year alone, some major organizations in Malaysia have announced massive job cuts. This is in line with global trend and will continue.
“Hence, new businesses need to be set up, existing businesses need to grow, jobs need to be created and the existing labor force needs to be reskilled and upskilled to be relevant in the new business world.
“Tax policies can and should be geared towards meeting these objectives. Other government policies should be geared towards making it easier and less costly to do
business.”