How Does The New Budget 2023 Compare With The Old One?

How Does The New Budget 2023 Compare With The Old One?

In the parliamentary session today,  Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, tabled the new and revamped Budget 2023. 

In his address, he stressed on a few key principles that will determine the success of the budget; specifically the need to eradicate corruption within the government and quick, definitive action in drawing up the framework of the Budget.

As explored in one of our pre-budget articles, it is understandable that the new government spearheaded by the Prime Minister wants to table a new budget, as this is their chance to shape government spending to help deliver on their promises.

Introduction to Budget Madani

In the tabling of Budget 2023, Datuk Seri Anwar Ibrahim announced that the theme of the new Budget 2023 is Budget Madani, and it will be driven on three main focuses – driving an inclusive and sustainable economy, inspiring confidence with institutional and governance reforms, and facilitating social justice by reducing inequality.

So how does Budget Madani stack up against its predecessor? Here’s a table comparing it’s key aspects;

Budget MadaniBudget Keluarga Malaysia
Total BudgetRM388.1 billionRM372.3 billion
Operating ExpenditureRM289.1 billionRM272.3 billion
Development ExpenditureRM99 billionRM95 billion

As you can see from the table, the total budget for Budget Madani is slightly higher from the previous budget tabled during Datuk Seri Ismail Sabri’s government, at RM388.1 billion. Just like its predecessors, Budget Madani is the largest budget in Malaysian history, beating out the previous record holder, Budget 2022 by RM56.1 billion.

In Datuk Seri Anwar Ibrahim’s speech, he lined out a number of initiatives that are designed to help Malaysians combat the issues plaguing them right now, such as the rising cost of living and food security.

New taxes introduced

One of the first things that the Finance Minister announced during the tabling of the budget is the implementation of a few new taxes, most interestingly the luxury items tax, which will affect items like high end luxury clothing or watches.

On the subject of taxes, he also announced a tax adjustment for personal income tax, which sees a 2% reduction for the RM35,000-RM100,000 tax bracket, but an increase of 0.5 to 2% for tax brackets above RM100,000.

This move is actually similar to the personal tax reduction announced in the previous budget. In which a personal tax reduction of 2% was announced forthe RM50,000-RM100,000 income bracket.

A boon for PTPTN borrowers

Following that, Budget Madani also took some pointers from its predecessor in the initiatives for PTPTN borrowers, as Budget Madani included a 20% discount for PTPTN repayments for three months, starting from 1 March 2023.

Along with that, PTPTN also received another boon in the form of a six months deferment of repayment for individual borrowers earning less than RM1,800 per month.

In comparison, the earlier budget announced a 20% discount for anyone repaying their PTPTN debts in full.

Women empowerment from a different perspective

Compared to Budget Keluarga Malaysia, Budget Madani took a different approach when it came to women empowerment. 

While Budget Keluarga Malaysia focused on establishing women’s role in the corporate sector with its initiatives, Budget Madani chose to focus on helping women reintegrate into the workforce after maternity leave.

A bevy of initiatives and incentives were announced to help women re-enter the workforce, such as an amendment to SOCSO to allow for a grant that will cover 80% of the individual’s insured salary, a tax incentive to incentivise the establishment of nurseries in offices, and the development of 80 new KEMAS preschools.

SMEs continue to win big

Just like in the previous budget, SMEs were given extra love and care from Budget Madani, with a host of initiatives to help SMEs regain their footing in a post-pandemic world.

Here are the initiatives introduced in Budget Madani for SMEs;

  • Corporate income tax reduction from 17% to 15% for the first RM150,000,
  • RM50 million allocated to build and upgrade 3000 small hawker stalls and kiosks
  • RM176 million to upgrade premises and facilities
  • RM40 billion in loan facilities and financing guarantees for SME entrepreneurs
  • RM1.7 billion in loan facilities for MSMEs and small vendors under agencies such as Bank Negara Malaysia, BSN, and TEKUN

In comparison, Budget Keluarga Malaysia introduced the same corporate income tax reduction from 17% to 15%, albeit for the first RM100,000 only.

A very comprehensive budget

To wrap it up, Budget Madani is trying to do more for the people – while implementing additional revenue streams for the government. A luxury tax, limited-scope capital gains tax, and increase in income tax on the highest earners are likely to have little impact on the average Malaysian. However, they may help with the government’s goal of reducing the national deficit.

Now, as usual, it’s time for us to wait and see how well this Budget serves the people.

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