In general, the Budget 2009 is less likely to "touch" the mass and ease inflationary burden of average Malaysian in our opinion. Biggest beneficiary for this round are households living in hardcore poverty and very poor status. The government is now reaching out to those households earning less than RM720 in Peninsular Malaysia, RM830 in Sarawak and RM960 in Sabah a month. Hopefully these aids get to them properly and timely through properly government channels. We would not want to see "other hands" meddling with poor people's money.
We think some of these measures are "illusive" and lack the substance to relief inflationary pressure and spur growth in general. Take for example the tax cuts: top-most bracket individuals now pay tax rate of 27% (28% last year) which is still more expensive than corporate tax of 26%. In terms of luring in more foreign direct investment (FDI), Malaysia lacks the incentives and attraction. Whilst Malaysian corporate pays 26% for corporate tax, HK corporate and Singapore corporate tax stood 17% and 18% respectively. Tax rebate for individual relief was only raised by RM50 !!! (OH MY GOD - only equivalent to 11 bowls of noodles - KL standard). Free electricity if your monthly bill is lesser than RM20. Jeez, think about it, very little of us consume that little electricity.
SNIPPETS
- For individuals paying the highest marginal tax rate bracket, government reduced the ceiling tax rate from 28% to 27%.
- Tax rate chargable for income group earning RM35,000 to RM50,000 is now 12% compared to 13% last year. Tax rebate (for individual relief) was raised from RM350 to RM400.
- Allowances and benefits in kind received from employers are tax-exempted. (ie. training and education, TMNet services, books & reading materials are tax free if your employers awards you, which they normally don't)
- Reduction in import duties of consumer durable goods from 10-60% range to 5-30% range. Essential food import duties lowered to 2-20%.
- Free electricity bill if your monthly bill is lesser than RM20.
- Road tax for diesel vehicles reduced to the same rate as petrol vehicles.
- Interest Income for individual is zero tax.
- Welfare assistance eligibility criteria raised from RM400 to RM720 for Peninsular Malaysia RM830 for Sarawak and RM960 for Sabah. This is to help more poor and hard-core poor household benefit from this welfare facility.
- Excise duties on cigarettes raised by 3sen to 18sen per stick. So, duties for a pack of 20's is now raised by 60sen. Starting 1-Sep-2008, pack of 20's Dunhill is RM9.00, pack of 14's is RM6.50. Pall Mall is RM8.20 for (25s) RM7.50 for (20s) and RM5.50 for (14s). We know that the sums do not add up; so this is the breakdown. Example Dunhill (20s): Pre-budget price RM8.20 + new tax hike for 20 sticks RM0.60 + (escalated costs: tobacco leaves, fertilizer, packaging, distribution) RM0.20.
- Bonus for civil servants for 2008 is minimum of RM1,000 or 1 month.
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