I
would say the Budget 2013 is fair (in a rating system, I would give it a 3.5
star rating from 5). The Government does
well to balance its fiscal responsibilities and populist measures. However, it lacks creative solutions in
handling “hot issues” such as high cost of living, high crime rates, etc. Most of the measures are direct subsidies and
incentives taken straight from conventional economic text books (PR’s
Belanjawan did better with creative proposals).
As a country undergoing economic transformation, the lack of “out of the
box” measures is disappointing.
Below
are my thoughts on some of the measures in Budget 2013.
Children
· Tax Incentives for operators of childcare
centres and employers who provide allowance or subsidies to their employees for
the maintenance of childcare centres.
I believe this will provide some relief especially to middle and
lower-income families in the city. Lack of
affordable childcare centres have caused many families to hire maid to take care
of their young children. With the rising
cost of hiring a maid, the cost of taking care young children has become one of
the major expenses for families in urban areas (By the way, I am surprise that childcare/maid is not part of expenses for average middle income households).
Handouts
·
Continuation and extension of BR1M.
·
Schooling Assistance of RM100 to all
primary and secondary students.
Continuation of handouts will make it harder for the Government to stop
them in the future. The handouts are
given at a time when Malaysia is recording 5% economic growth. Just imagine if Malaysia records 2% of growth
or lower, the rakyat will expect bigger handouts.
As for the Schooling Assistance, how many of us did really use them to
purchase something ‘educational’. Not to
forget, the extra expenses by the schools in hiring security to collect those
money in cash and keep them at school.
It is much better if the allocation is channelled to individual schools
(based on the number of students) for the schools to spend as they deem fit
(for the benefits of their students of course).
Internet-related
· 100 1Malaysia Internet Centres in
selected urban poor areas
· Smartphone rebates for youth
These measures were intended to increase the poor and youth access to
the information highway. However, both
measures targeted have its limitation. Internet
centres have its limitation in capacity.
As for smartphones, they are available in the market in wide range of
prices as cheap as RM500. Most youth
already has a smartphone and a rebate will only make youth upgrade their phone
to a more expensive one. I think the
issue at hand is the cost of accessing the information highway and a better
measure would be the creation of more free Wi-Fi hotspots in targeted areas to
reduce cost of access.
Investment
· Tax incentives on investment made by
an angel investor in a venture company.
This is one of my wish list. It
would be much better if the Government tops up the investment to reduce the
investors’ risk.
PTPTN
·
PTPTN discounts.
Although the Government tried to put the discounts as a measure to
reduce the burden of young people, I see the discount as a way for the
Government to collect the debt as soon as possible for its coffers. There are other ways to reduce the burden of
PTPTN debtors such as reducing/eliminating the administration fees.
Subsidies
·
Reduction of sugar subsidy.
I was not expecting many subsidy reductions as it is an election budget
but only one subsidy reduction is very disappointing. I was expecting at least a timetable on
subsidy reduction as what suggested in PEMANDU’s subsidy rationalisation plan. Admittedly, cutting back on subsidies is a
tough choice to make but delaying it further will make it tougher in the future
to restructure the government’s finance.
Tax
· "A review of Malaysia’s taxation
system will be continued to ensure the taxation system better reflects the
household’s financial position”.
Another one in my wish list although it was just a sentence in the
Budget. It hinted the implementation of
GST in the next few years.
· Reduction on individual income tax rate
by 1 percentage point for individuals with annual income less than RM50,000.
I find this measure puzzling.
This measure will only provide a maximum saving of RM425 per
person. After taking into account the
new tax rebates and reliefs, I guess the saving will be RM300 at most. As a result of this measure, 170,000 taxpayers
will be removed from paying tax. It further
reduces the number of people in the workforce that pays tax, cutting further
the government’s revenue sources. This
measure shall be introduced at the same time with GST, as a carrot for GST
implementation. Now, the government has
one carrot less when the time to implement GST comes.
