MALAYSIA’S revised RM386 billion budget for 2023 has generated mixed reactions. Some lauded it as a genuine effort to boost the country’s economy, while others saw it as a political manoeuvre ahead of the upcoming state election.

The budget represents a 6.9% increase over the previous budget of RM360 billion, making it the country’s most significant budget in history.

It proposes RM164 billion in development expenditure, a 7.8% increase over the previous development expenditure of RM152 billion.

According to the government, the budget will prioritise healthcare, education, and jobs creation.

The Ministry of Health has been given RM3.7 billion for improvements and to combat Covid-19.

The Ministry of Education has been given RM2.2 billion to improve school infrastructure and facilities, as well as to assist students from low-income families.

The budget also includes measures to help the digital economy grow, such as RM1 billion for the Malaysia digital economy blueprint and RM1 billion for the national fiberisation and connectivity plan.

To increase productivity and competitiveness, RM100 million has been set aside for automation and digitalisation grants for small and medium-sized enterprises (SMEs).

While some critics question whether this sum can spur growth in the sector, the government has defended the budget, claiming it will stimulate economic growth and benefit all Malaysians.

The government has proposed new taxes, including a luxury tax, capital gains tax, and tobacco and vape product taxes.

The luxury tax will apply to high-end cars, yachts and aircraft, while the capital gains tax would apply to real estate and stocks.

Middle and lower-income groups have expressed concern that they will be disproportionately affected by the proposed tariffs.

The government has also announced a reduction in personal income tax for M40 earners, while those earning more than RM100,000 will face a higher levy.

The top marginal tax rate for those earning more than RM2 million annually will be raised from 30% to 33%.

However, from the opposition perspective, the proposed budget lacks detail on how funds will be allocated.

Civil society organisations have also emphasised the need for a more comprehensive and transparent plan.

They have expressed concerns about the proposed new taxes, which they also believe will disproportionately affect lower and middle-income groups.

What measures will be implemented to ensure the tax burden is distributed fairly?

Will the income tax cut for M40 earners be sufficient to offset the effects of the proposed new taxes?

Moreover, the decision not to cancel the RM8.3 billion Felda settlers’ debt is a betrayal of the promises made by the previous Perikatan Nasional (PN) government to provide relief to the community that had accumulated significant debt due to mismanagement and corruption within the Felda organisation.

Cancelling this debt would have provided substantial relief to the settlers, who had been grappling with low commodity prices and other economic challenges.

We believe the budget is little more than empty rhetoric designed to win votes ahead of state elections.

The government has failed to address the underlying causes of Malaysia’s economic problems, and the proposed tax policies will unfairly burden middle and lower-income groups.

We call on the government to provide greater transparency in the budget allocation process and to address the systemic issues that are holding Malaysia back. – February 26, 2023.

* Mahathir Mohd Rais is PN information chief for the Federal Territories.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.