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25 February 2023. Saturday
KUALA LUMPUR (Feb 25): In Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim’s maiden budget under the unity government, emphasis was given on the need for the wealth and income of the country to be redistributed more equally.
Among measures to redistribute wealth is the restructuring of the income tax rate for individuals, wherein the tax rate of those earning between RM35,001 and RM100,000 will be reduced by two percentage points.
Meanwhile, those earning between RM100,001 and RM250,000 will see their tax rate increased by one percentage point. Those in the income bracket of between RM250,001 and RM400,000 will see their income tax rate increase by 0.5 percentage point.
Taxpayers with taxable income of between RM400,001 and RM600,000 will see their tax rate rise by one percentage point, while those earning between RM600,001 and RM1 million will see their income tax rate increase by two percentage points.
Compared with previous budgets, the revised Budget 2023 does not have much emphasis on projects. No big projects — except for the Pan Borneo highway — are mentioned in the budget speech.
However, there are concerns raised over Anwar’s budget.
One worry is that the increase in income tax rates for high income earners could exacerbate the brain drain problem the country faces.
The likelihood of a capital gains tax, which the government has proposed to be implemented in 2024, is also a point of contention. Will it lead to the erosion of Malaysia’s competitiveness as an investment destination and as a place to do business?
Aside from these, Budget 2023 also focuses on ensuring food security and sustainability, development of Malaysia’s technical and vocational talents, as well as improve the country’s competitiveness to attract foreign investments, among others.
Find out how Anwar is tinkering with the tax structure and other budgetary measures in The Edge Malaysia weekly’s cover story this week.
