LOW-INCOME GROUPS TO BENEFIT MOST, SAYS MARC
Budget expected to focus on strengthening medium- and long-term fundamentals
THE 2019 Budget will focus on strengthening the economy’s mediumand long-term fundamentals by alleviating imbalances that have accumulated over the past few years, said Malaysian Rating Corp Bhd (MARC).
It said the main beneficiaries would be those who need aswhich sistance the most, are the Bottom 40 per cent (B40) and the Middle 40 per cent household income groups, as well as small and medium enterprises. MARC said recent findings by Khazanah Research Institute on the widening income gap underscored the need to further assist the low-income groups. “However, financial aid for such groups could be made conditional to help mitigate the rising costs of living. Similarly, blanket subsidies (fuel subsidy) will be replaced by aids targeted only at low-ingroups,” come it said in a report on “Pre-Budget 2019: Getting Finances Back on Track”. On Monday, Affin Hwang Capital said the 2019 Budget would reaffirm the government’s commitment towards new policies and reforms, such as enhancing the well-being of the people, especially the B40 group.
It said while Finance Minister Lim Guan Eng has noted that the budget would include some belttightening measures, the austerity policy would likely focus on enhancing spending efficiency.
MARC said there is an urgent need to raise revenue in the mediumand long-term due to the loss of revenue from the abolition of the Goods and Services Tax.
Several options have been discussed, including taxes on foreign providers in the digital economy, higher stamp duties for property transactions by foreigners and sin taxes.
MARC said the current tax incentives given to different industries could be made conditional.
Inheritance and capital gains taxes may not be considered in the near term as more studies are required to assess the effectiveness and repercussions on the capital market and economy, it added.