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KUALA LUMPUR (Bernama): The allocation for the 2021 Budget is projected to be worth RM330bil, 10% more than the 2020 RM297bil Budget.
Patrick Tay, a deals partner at PwC Malaysia, believes that the 2021 budget will be designed to maintain fiscal stimulus to help Malaysia return to positive growth territory.
“Together with the monetary stimulus from Bank Negara, we would expect Malaysia to achieve moderate growth in 2021,” he told Bernama.
Tay said that depending on the amount of revenue the government expects to raise in 2021, this can result in a significant deficit north of the current 6.0% projected, probably around 7.0% -8.0%.
“There is no rocket science – a sensible Covid-19 (pandemic) budget will take time to address the issues of lives and livelihoods,” he said.
On lives, Tay said the government is expected to increase the allocation of resources to the public health system, especially front-line ones, and to buy personal protective equipment that is important for controlling and managing Covid-19 cases.
With the possibility of a vaccine available towards the end of the 2021 budget period, the allocation is likely to help secure supplies.
“And in terms of livelihoods, we believe that government aid to small and medium-sized enterprises (SMEs) and rakyat should continue, so continued allocations are expected.
“Finally, with a political view, it will not be a surprise if the budget makes allocations to support Sabah in its battle against Covid-19, Sarawak and the rural states of the north and the east coast,” he said.
On the goods and services tax (GST), Tay said he thinks the government is more likely to signal its reintroduction when the economic recovery has taken firm root.
“The economist in me says there is no time like the present to reintroduce the GST as a measure to broaden the tax base and capture some income from the informal or gray economy,” he said.
Tay said it is important to have sufficient prep time to ensure a successful reintroduction, such as a robust pricing monitoring system including enforcement, building knowledge for enforcement agencies, and reducing the cost of filing compliance. quarterly.
Tay also suggested that the government reduce income tax rates, as well as provide cash vouchers to all qualifying B40 households, sales and service tax-free holidays for at least three months to avoid the pyramid of taxes and the automatic refund of input tax.
Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz will present the 2021 Budget in Parliament at 4pm on Friday. – Bernama
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