Tax cuts will boost economy, provide multiplier impact — Tengku Zafrul
07 Oct 2022
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz acknowledged that the tax cuts announced in Budget 2023 would impact the government’s revenue but believes that it would give 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 provide 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 amidst a 4.4% decline predicted in Federal government revenue for 2023.
It could show a RM272.6 billion or 15% of gross domestic product (GDP) 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% 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 is up to RM1,000 and for the top-income group (T20) is up to RM250.
“Consequently, an estimated RM800 million will be available as surplus income that the people can spend,” he said.
About the goods and services tax (GST) implementation, he said the discussion on it depends very much 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.