PETALING JAYA: Goods and Services Tax (GST), tax breaks for 300,000 individual taxpayers and higher 1Malaysia People's Aid (BR1M) payouts - these were among the highlights of Prime Minister Datuk Seri Najib Abdul Razak's Budget 2015 speech.
Najib, who presented his budget speech before the Dewan Rakyat on Friday, first shook Parliament when he announced that 2,900 items would be GST-free.
"Based on the feedback from all segments of society, the Government agrees to widen the scope of items that will not be subjected to GST," said Najib.
He said items that would not be subjected to GST included all types of local and imported fruit, white and wholemeal bread, coffee powder, cocoa powder and tea dust and yellow mee, kuey teow, laksa and mee hoon, along with the National Essential Medicine covering almost 2,900 medicine brands.
"These medicines are used to treat 30 types of diseases including heart failure, diabetes, hypertension, cancer and fertility treatment," said Najib.
Aside from these items, he added that reading materials - including children's colouring books, exercise and reference books, text books, dictionaries and religious books and newspapers would be GST-free.
"In addition, the Government has also agreed electricity consumption that is not subject to GST be increased from the first 200 units to 300 units. This will benefit 70% of households. Further, the Government has agreed that the retail sale of RON95 petrol, diesel and LPG be given relief from the payment of GST," said Najib.
He added these measure were so that consumers and targeted groups would not be burdened, and to ensure the implementation of GST would not burden the rakyat.
In his Budget 2014 speech last October, Najib had announced that the hotly-debated GST would be introduced from April 1, 2015 at a rate of 6%, which he had said was the lowest in the Southeast Asia region, lower than the 10% imposed by Indonesia, Vietnam, Cambodia, the Philippines, and Laos and 7% in Singapore and Thailand.
On the imposition of GST, Najib said that out of the 944 goods and services covered under the Consumer Price Index, the prices of 532, or 56% of items were expected to rise by 4.1%.
"Among the goods are medicines, electrical appliances such as refrigerators and washing machines, textile products, plastic products such as pails and plates, shoes and slippers, household furniture, baby diapers, soap, meat, chicken eggs, cooking oil, seafood, rice and vegetables," said Najib.
He added that another 354 goods and services would see a price increase, but one that was less than 5.8%.
"The Government hopes that traders will be responsible and not raise prices indiscriminately to burden the rakyat. The Government will disseminate shoppers’ guide to enable consumers compare prices before and after the implementation of GST," said Najib.
On the tax exemption, Najib said that individual income tax rates will be reduced by one to three percentage points.
"With this measure, 300,000 individual taxpayers will no longer pay income tax. Tax payers with family and income of RM4,000 per month will not have tax liability.
“Individual income tax will be restructured whereby the chargeable income subject to the maximum rate will be increased from exceeding RM100,000 to exceeding RM400,000," said Najib.
He added that the current maximum tax rate at 26% will be reduced to 24%, 24.5% and 25%, which will result in the existing taxpayer enjoying a tax saving of at least 5.3%.
"For year of assessment 2015, cooperative income tax rate will also be reduced by 1 to 2 percentage points. In addition, secretarial fee and tax filing fee are allowed as deduction. For year of assessment 2016, corporate income tax rate will be reduced by one percentage point from 25% to 24%; and for 2016, income tax rate for SMEs will also be reduced by one percentage point from 20% to 19%," said Najib.
On increasing the BR1M payout, Najib said this could be done after taking into consideration the increased revenue collection from GST and the "affordability of the Government".
"We will increase BR1M from RM650 to RM950. The assistance is for households with a monthly income of RM3,000 and below. It will be disbursed in three instalments of RM300 each to be paid in January and May with the balance of RM350 from September 2015," said Najib.
He added that for households with a monthly income between RM3,000 and RM4,000, the Government will increase BR1M from RM450 to RM750.
"This assistance will be disbursed in three instalments, that is, RM200 to be paid in January and May while the balance of RM350 from September 2015, and for single individuals aged 21 and above and with a monthly income not exceeding RM2,000, BR1M will be increased from RM300 to RM350 a year. This assistance will be disbursed early next year," said Najib.
He added that the Government would replace the group takaful insurance or i-BR1M with Family Bereavement Scheme which will entitle the next of kin of BR1M recipients to receive RM1,000 effective for a year.
Civil servants will be given half-month bonus, Najib also announced.