The Big Winners Of Budget 2023 (Oct 7, 2022 Announcement)
Budget 2023 is here! During a live broadcast on 7 October 2022, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz presented Budget 2023 in Parliament today.
As expected there were no new taxes but the Finance Minister did hint that things might be different next year. He told reporters after his speech that the re-introduction of the Goods and Services Tax (GST) is expected to be discussed in cabinet depending on next year’s economic forecast.
This year’s budget was focused on economic recovery and resilience after all with theme “Strengthening Recovery, Facilitating Reforms Towards Sustainable Socio-Economic Resilience of Keluarga Malaysia”.
Mindful of these trying times for the rakyat, Bantuan Keluarga Malaysia direct cash aid is set to continue into 2023 with a RM7.8 billion allocation as well.
With RM372.3 billion allocated in total, Budget 2023 is the biggest budget announced thus far, breaking last year’s record of RM332.1 billion.
Education wins big once more
Once again, education has emerged as the biggest winner. Under Budget 2023, up to RM55.6 billion has been allocated for the Ministry of Education (MOE), while an additional RM15.1 billion has been allocated for the Ministry of Higher Education (MOHE), forming a grand total of RM70.7 billion.
Of that amount, up to RM825 million will be used for the early school preparation fund (for Bantuan Awal Persekolahan), providing RM150 for each student, irrespective of their parent’s income. Additionally, we will also see a RM1 increase for the Supplementary Food Programme (RMT), bringing the total up to RM3.50 for students in Peninsula Malaysia and RM4 for students in Sabah & Sarawak.
The government has also recognised the need to maintain a clean and functional learning environment. As such, they have allocated RM2.3 billion for the maintenance, renovation and repair of schools. Along with this, up to RM430 million is being set aside for the construction of new school buildings in Sabah, Sarawak, Terengganu, Cyberjaya & Selangor.
Those who are undergoing higher education in 2023 will be glad to know that there will be up to RM3.8 billion going into higher education scholarships and education loans. An additional RM10 million is also being made available for public universities to utilise on green initiatives and environmental pursuits.
Technical and Vocational Education and Training (TVET) initiatives are getting the biggest slice of the pie. The prime minister announced that RM6.7 billion will be reserved for initiatives and programmes related to TVET, with an additional RM180 million being used for TVET funds (skill certification programmes).
Parents will also be happy to know that they will be eligible for tax relief of up to RM3,000 for preschool and kindergarten school fees for the 2024 assessment year.
Another breakthrough year for women empowerment
If Budget 2022 took the first steps to empower Malaysian women, Budget 2023 is making a leap in terms of progress. This year, the government is making an even greater effort by establishing a gender focal team for every ministry. In addition to this, there will also be an establishment of an Anti-Sexual Harassment Tribunal in 2023.
The One-Stop Social Support Centre (O3SC) was established as a means to allow the public to submit complaints and inquiries, obtain information and access immediate relief to social-related issues that are associated with the Ministry of Women Family and Community Development (MWFCD). The government will be allocating RM8 million to further support this centre.
With regards to women’s health, up to RM11 million will be used to subsidise mammograms and cervical cancer tests.
To show their commitment to female entrepreneurship, the government will also allocate up to RM235 million for the special funding of women businesses. Special training programmes are also being implemented with the aim of strengthening the role of women in the corporate sector.
Finally, continuing on from last years’ efforts to bring women back into the workforce, there will be an income tax exemption period lasting from 2023-2028 for women coming back to work from career breaks.
Focus on building businesses
Now that we are well on the road to recovery from COVID-19, more attention is being paid to helping SMEs recover as they form the backbone of the country’s employers and a major source of tax revenue for the government. The first announcement that is likely to make SMEs happy is a reduction in tax rate from 17% to 15% for the first RM100,000 of revenue for SMEs.
The government also announced a RM1 billion allocation for a one-off grant of RM1,000 to help 1 million registered SMEs and taxi drivers.
In addition to this, the government also revealed this year’s SemarakNiaga initiatives, which will allocate about RM45 billion in total for government grants, direct loans, alternative financing, & financial guarantees. Some of the announced initiatives are as follows:
- RM350 million for Micro Traders Financing Scheme
- RM150 million in BSN Micro Loans for BSN Bumiputera merchants
- RM300 million for Bumiputera, women, youth, & informal sector via TEKUN
- RM200 million for Chinese SME Financing Scheme with rates as low as 4%
- RM25 million for Indian Community & Entrepreneurs Financing Scheme (SPUMI)
- RM100 million for implementing Indian entrepreneurs development via MITRA
- RM10 million to match the funds of financial institutions: zakat & wakaf donations via iTEKAD
- RM100 million for Working Capital Financing Co-operative Societies Commission to help cooperatives develop the agro-food industry
- RM10 million to assist the automation and digitalisation of SMEs and food security and recovery in the tourism industry via BNM
- RM135 million for Bumiputera Prosperity Fund via TERAJU
- RM200 million for Bumiputera retail and trade distribution sector via PUNB
- 100% Duty Exemption on loan/financing restructuring or rescheduling until 2024
A small reprieve for M40
Last year, the government made an effort to expand the tax base, resulting in some new taxes that hit quite a number of Malaysians rather hard.
This year, the government has decided to reduce the income tax rate by 2%. However, this will only affect the RM50,001 to RM100,000 tax bracket. While this will offer some slight relief for most M40 and some of the people in the upper tiers of B40, the majority of B40 and T20 will remain unaffected.
With this new tax rate being implemented, the new tax rate for the RM50,001 – RM70,000 bracket will be 11%, while the new rate for the RM70,001 – RM100,000 bracket will be 19%. The combined tax bracket of RM250,000 – RM400,000 and RM400,000 – RM600,000 will remain at 25%.
If there is anything we can take away from this year’s budget announcement, it is that the government is fully committed to their support of education and SMEs. As the world struggles to stay afloat in a dismal global economic outlook, the government is dedicating much towards ensuring the survival and prosperity of our small businesses and the future of the next generation.
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