KUALA LUMPUR – Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz acknowledged that the tax cuts announced in Budget 2023 would impact the government’s revenue but believes that it would have a positive multiplier effect on the country’s economy.
“There will be some impact (to the revenue) but the amount of money that is being fed to the economy is expected to give a multiplier impact, especially the tax cut on the middle-income group (M40),” he said.
The minister was responding to the tax cuts that were announced amid a predicted 4.4% decline in federal government revenue for 2023.
It could result in a RM272.6 billion or 15% of gross domestic product decrease to the federal government’s coffers due to the anticipated lower non-tax revenue collection.
Among others, the finance minister announced that the resident individual tax is reduced by 2 percentage points for taxable incomes of between RM50,000 and RM100,000 per annum.
He also said that for taxable incomes between RM50,000 and RM70,000 per annum, the tax rate will be lowered to 11% from 13%, while for taxable income within the RM70,000 to RM100,000 range, the rate will be reduced from 21% to 19%.
Additionally, the tax rate for taxable incomes between RM250,000 and RM400,000 per annum as well as between RM400,000 and RM600,000 per annum will be at 25%.
Tengku Zafrul said with this special income tax treatment, tax savings for the M40 group is up to RM1,000 and for the T20 group is up to RM250.
“Consequently, an estimated RM800 million will be available as surplus income that the people can spend,” he said.
He also said discussions on the potential goods and services tax implementation would depend on the country’s economy in 2023.
On Petronas, he said the dividend to the government next year is expected to be RM50 billion, similar to what was received in 2022. – Bernama, October 7, 2022
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