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Friday October 25, 2013 MYT 8:14:00 PM
Friday October 25, 2013 MYT 9:00:09 PM
by tan yi liang
PETALING JAYA: The Goods and Services Tax (GST), abolition of sugar subsidy, 1Malaysia People's Aid (BR1M) and higher property taxes - these were the highlights of Prime Minister Datuk Seri Najib Tun Razak's Budget 2014.
Najib, who presented his budget speech before Parliament on Friday, first shook the House when he announced that the hotly debated GST would be introduced from April 1, 2015 at a rate of 6%.
"With the implementation of GST, the Government will be able to address the weaknesses in the current taxation system.
"As an example, if we were to buy a carbonated drink in a restaurant today, we would not notice that we are paying double taxes, which are sales tax and service tax.
"With the GST system, consumers will only need to pay tax once and the price of goods should be cheaper," he added.
Najib, who said the 6% GST was the lowest in the Asean region compared with 10% in Indonesia, Vietnam, Cambodia, the Philippines and Laos, and 7% in Singapore and Thailand, added that the Government would also provide a one-off payment of RM300 to BR1M households when GST was implemented.
Announcing other tax reductions to offset the introduction of GST, Najib said families with a monthly income of RM4,000 will no longer have any tax liabilities, with individual income tax rates being reduced by one to three percentage points for all taxpayers to increase their disposable income. This, he added, meant that 300,000 taxpayers will no longer pay income tax.
Najib said that certain essential items, however, would be exempted from GST - essential food items, transport services including toll payments, purchase and rental of residential properties and selected financial services.
GST will also not be imposed on basic food items, piped water supply, the first 200 units of electricity per month for domestic consumers, services provided by the Government such as issuance of passports and licences, health services and school education.
The second key point of Najib's Budget 2014 speech was the abolition of the 34 sen sugar subsidy effective Saturday, which he said was being done to curb the high diabetic rate among Malaysians under the age of 30.
"Statistics indicate that 2.6 million Malaysians under the age of 30 are diabetic. If left untreated, patients will face various complications such as heart disease, kidney failure, blindness and amputation,” said Najib.
With the removal of the subsidy, the price of sugar will rise from RM2.50 to RM2.84 per kg.
On BR1M, Najib said that RM450 cash aid would now be extended to households with a monthly income ranging between RM 3,000 and RM 4,000.
"The assistance is given to alleviate the rising cost of living borne by the lower middle-income group," said Najib.
He added that the BR1M payment for households with a monthly income of RM3,000 and below would be increased from RM500 to RM650 while single individuals aged 21 and above with an income not exceeding RM2,000 would see their BR1M payment increased from RM250 to RM300.
BR1M was first introduced in 2012, providing cash aid of RM500 to households with income of RM3,000 and below.
On housing, Najib said that real property gains tax (RPGT) would be increased to 30% for properties disposed within the three-year holding period, whereas for disposals within the holding period up to four and five years, the rates are increased to 20% and 15%.
"For non-citizens, RPGT is imposed at 30% on the gains from properties disposed within the holding period of up to five years and for disposals in the sixth and subsequent years, RPGT is imposed at 5%," said Najib.
He added the minimum price of property that can be purchased by foreigners would be increased from RM500,000 to RM1,000,000 and that transparency in property sales prices would be increased.
"Property developers will have to display detailed sales price including all benefits and incentives offered to buyers such as exemption of legal fees, stamp duty, sales agreements, cash rebates and free gifts," said Najib.
Overall, Budget 2014 has its sights trained on the lower- and middle-income groups.
As Najib said when wrapping up the Budget speech, "We acknowledge that there may be some weaknesses in our administration in the past. However, we have always placed the rakyat's interest above all else. With the solid support of the rakyat, we will continue to improve. If we remain united, there are no problems that cannot be solved."
Tags / Keywords:
Budget 2014, Parliament, Finance Ministry, GST, sugar subsidy
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