{"id":59050,"date":"2023-10-06T11:36:19","date_gmt":"2023-10-06T03:36:19","guid":{"rendered":"http:\/\/wordpress-my-161844363.ap-southeast-1.elb.amazonaws.com\/articles\/?p=59050"},"modified":"2024-02-06T12:15:56","modified_gmt":"2024-02-06T04:15:56","slug":"what-expect-budget2024","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/what-expect-budget2024","title":{"rendered":"What You Can Expect To See In Budget 2024"},"content":{"rendered":"

Next week, on the 13 October, the government will table Budget 2024, which will determine our country\u2019s monetary and fiscal policies for the upcoming year.<\/span><\/p>\n

The budget for 2024 is under extra scrutiny due to a flagging economy. This can be seen from a news report earlier last month, stating that the finance ministry (MOF) had to <\/span>extend the Budget 2024 feedback period<\/span><\/a> due to overwhelming response.\u00a0<\/span><\/p>\n

<\/span>What is the theme of Budget 2024?<\/b><\/span><\/h2>\n

Earlier this year, Prime Minister Datuk Seri Anwar Ibrahim has already stated the <\/span>theme of Budget 2024<\/span><\/a> is “Madani Economy: Empowering the People\u201d.<\/span><\/p>\n

But what does this entail?<\/span><\/p>\n

Well thankfully, we don\u2019t have to make haphazard guesses because the Deputy Finance Minister II, Steven Sim Chee Keong had already said that the government will focus on empowering and strengthening the middle class, and small and medium enterprises (SMEs).<\/span><\/p>\n

In a report from Bernama reposted on <\/span>MOF\u2019s official website<\/span><\/a>, Sim said that the decision to focus on the middle class in this Budget is due to the fact that the middle class was the group that was affected the most during the pandemic.<\/span><\/p>\n

“Hence, one of the key focuses in Budget 2024 is on empowering the middle class group and reducing their burden due to the rise in the cost of living,\u201d said Sim.<\/span><\/p>\n

Based on the Household Income and Basic Amenities Survey Report 2020 by the Department of Statistics Malaysia (DOSM), 20 percent of households from the M40 group have fallen into the B40 group due to lasting effects of the Covid-19 pandemic.<\/span><\/p>\n

And while they might be considered M40 in accordance with their income group, the truth is that they are also struggling financially. In fact, the middle class have been labelled the <\/span>\u2018new poor\u2019<\/span><\/a> before.<\/span><\/p>\n

Which is a problem, considering that the middle class is the <\/span>bedrock of Malaysia\u2019s economy<\/span><\/a>.<\/span><\/p>\n

So how should the government address this issue in Budget 2024? To answer that question, we spoke to Michelle Chuo, Tax Director from PwC Malaysia.<\/span><\/p>\n

<\/span>\u201cIf you give a man a fish..\u201d<\/b><\/span><\/h2>\n

One of the main things that people are waiting for in Budget 2024 is how the government will address the rising cost of living. A survey conducted by the UCSI Poll Research Centre showed that 89 per cent of Malaysians said they were concerned about cost-of-living issues.<\/span><\/p>\n

\"\"<\/a>

Michelle Chuo, Tax Director, PwC Malaysia.<\/p><\/div>\n

And according to Chuo, while the government should continue to focus on subsidies, importance should also be given to upskilling people.<\/span><\/p>\n

\u201cThe government should continue to focus on targeted subsidies. However, subsidies can only be a short-term measure.<\/span><\/p>\n

\u201cThere is a Chinese saying, \u201cif you give a man a fish, you feed him for a day. If you teach a man to fish, you feed him for a lifetime\u201d. Knowledge is power and upskilling our people should continue to be the key focus.<\/span><\/p>\n

\u201cSimilar to targeted subsidies, upskilling measures should also be targeted to ensure our people are equipped with the right skill sets and attitude. The government could consider collaborating with the private sector by providing tax incentives to companies undertaking structured training programmes or providing on-the-job training programmes to the B40 community,\u201d said Chuo.<\/span><\/p>\n

She also added that, \u201cthe wellbeing of the workforce should be taken care of. The government could consider tax measures to ensure that businesses comply with the minimum wage requirements and curb the hiring of illegal workers.<\/span><\/p>\n

\u201cIn addition, the government could consider tax incentives for businesses to enhance the working conditions of employees. Collectively, these measures will help to improve the people’s standard of living in a sustainable manner.\u201d<\/span><\/p>\n

<\/span>Introducing a Capital Gains Tax will not be a surprise<\/b><\/span><\/h2>\n

Another big question mark that people hope will be answered in Budget 2024 is how the government will address the need for the government to secure more revenue.<\/span><\/p>\n

Which is why the government has long looked into the possibility of introducing a new capital gains tax in Malaysia. However, the suggestion has been met with mixed reactions from experts.<\/span><\/p>\n

While some believe that the introduction of a <\/span>capital gains tax is timely<\/span><\/a> and will raise much needed revenue, some say that the move will scare off investors.<\/span><\/p>\n

When queried about this, Chuo explained that Malaysia actually already has a capital gains tax, but the introduction of a new and more refined capital gains tax will definitely strengthen the economy and diversify Malaysia\u2019s source of revenue.<\/span><\/p>\n

\u201cWe already have a limited Capital Gains Tax regime in place since 1976, in which the gains from the sale of real properties and shares in a real property company would be subject to Real Property Gains Tax.<\/span><\/p>\n

\u201cThe Capital Gains Tax announced in the re-tabled Budget in February 2023 only covers capital gains from transfer of unlisted shares by corporate shareholders.<\/span><\/p>\n

Chuo also explained that in the current situation, there is a pressing need for the government to increase the tax base.<\/span><\/p>\n

\u201cMore than 50% of our country’s tax collection relies on direct taxes collected from business profits and employment income. With the change in business models over the decades, businesses no longer just generate profits from the traditional manufacturing \/ trading activities, there could also be significant gains arising from realisation of investment. There is a need to widen the tax base to fund various government initiatives and to narrow the fiscal deficit.<\/span><\/p>\n

\u201cIntroducing a Capital Gains Tax in Malaysia at this juncture will not be a surprise since Malaysia is among the minority jurisdictions in Asia which do not have a comprehensive Capital Gains Tax regime.\u00a0<\/span><\/p>\n

\u201cHaving a progressive tax regime to capture wealth not only from income but also from capital gains will strengthen our economy and diversify our nation\u2019s revenue.\u00a0<\/span><\/p>\n

But going back to some experts\u2019 reluctance towards seeing a capital gains tax, we also asked Chuo some points of contention that the government will need to address if they want to implement the new tax.<\/span><\/p>\n

\u201cThe government took the right approach to introduce a limited Capital Gains Tax on transfer of unlisted shares by corporate shareholders last February. This is a good starting point before we consider moving into a more comprehensive Capital Gains Tax regime.\u00a0<\/span><\/p>\n

\u201cThere are a few areas for consideration, which includes;<\/span><\/p>\n