KUALA LUMPUR: Budget 2013 was an election budget with lots of goodies for voters, from BR1M payments and smartphone rebates to discounts on PTPTN repayment loans for graduates and more.
Now that GE13 is over, the country has to count the cost of handing out too much money to the people.
With international rating agencies already warning us to pull up our socks and reduce the yawning budget deficit or face an imminent downgrade, Budget 2014 that Prime Minister Datuk Seri Najib Tun Razak will present in Parliament on Friday, is expected to be “realistic”, to say the least.
One of the worst hit groups in the country is the middle class who, as a family, earns under RM5,000 and are ineligible for the many goodies dished out to the working class in pre-election Budget 2012.
They are ineligible for medical services, not qualified for BR1M payments and discounts on PTPTN loans and don’t enjoy smartphones rebates and other incentives simply because their monthly income does not fall in the bracket.
They are also beginning to queue up like others for medical services and, being mostly urban dwellers suffer from the high cost of urban living, and on the lookout for various ways to cut down on living cost.
“We even have to budget for our car parking,” said a young, newly-married lawyer, adding that on top of everything, they also pay income tax.
“This time around we expect to see some goodies for us in Budget 2014,” she said adding that a lower income tax rate would be very helpful.
“A lower rate would give us back some cash which we can use to settle our mounting monthly bills,” she said.
The middle class are a powerful group in any society – they are organised, articulate and educated but always whining and complaining that nothing has been done for them.
Through various community groups, associations, political parties and also in the media, they have been making a serious pitch for government assistance.
And on Friday, the government has promised to look after the middle class and alleviate some of their woes, especially the high cost of living in the major towns and cities, especially Klang Valley.
The budget is going to be a careful balancing act - between helping the poor, reducing the deficit and keeping businesses happy but at the same time taking care of the all-important middle classes, who sometimes feel financially harassed.
While BR1M payments are expected to continue for the poor, the income eligibility however is expected to be raised from last year’s RM3,000 a month limit, to possibly RM4,000 a month, covering the lower middle class.
Ways to arrest the escalating property prices would figure centrally in the budget speech along with cuts in subsidies from sugar to fuel to electricity and gas. Hopefully the cuts called rationalisation are not too painful.
To broaden the tax base, the government is also expected to announce a GST that would likely start in 2015.
We simply have to wake up to the fact that only about one million people pay personal income tax in a country of over 28 million people and this is too narrow and has to be widened to share the tax burden.
It is clear that the government has finally realised that the middle income groups have been sandwiched and overlooked in the handing out of tax reliefs going by statements made by Cabinet ministers in recent weeks.
But it is not just the lower income bracket who are stretching the ringgit, the middle class too are trying to make ends meet.
They have to educate their children, pay for rising urban living like costly broadband, rentals, food and medical screening bills and even have to budget for their parking dues.
The middle classes have also other unique concerns of their own like green initiatives - such as home farming, recycling and rainwater harvesting, besides discounts for electric or hybrid cars, incentives for renewal energy.
All these have to be recognised and given incentives in Budget 2014.
Housing and urban living priorities are topmost for the middle classes along with a good public transport, education, public safety and a corruption-free government.
“Besides capping the escalating house prices we would also like to live in a crime-free environment and more allocation has to be made towards meeting this target,” said Jason Lim, a newly-married accountant.
“Private policing should be given consideration,” said the father of a one-year-old child.
Budget 2014 will be a fine balancing act – between satisfying the lower income groups, keeping the middle classes for satisfied and at the same time come to grips with a worsening debt situation.
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