RHB foresees expansionary fiscal consolidation in Budget 2021

KUALA LUMPUR: Budget 2021 will be expansionary, albeit at a lower magnitude, said RHB Research.

The research house projected an improvement in the fiscal deficit to 5.0 per cent of gross domestic product (GDP) in 2021 from 6.5 per cent in 2020, in line with the need for fiscal consolidation.

"The government has indicated that it is looking to expand the tax base, with all possible avenues being considered, that is the sales and service tax (SST) expansion, inheritance, capital gains or carbon tax, and goods and services tax (GST).

"However, given the weak economic momentum, it is likely that any such measures would be implemented at a later time. We also do not think sin taxes will be raised or a windfall tax be imposed on glove stocks in Budget 2021,” it said in a note.

Spending on social assistance is expected to remain significant, it said, adding cash handouts and targeted support to the tourism sector and small and medium enterprises may continue at least until the first half of 2021.

On property market, the research firm expects the government to maintain the current relief measures for the market with possibility of lowering the real property gains tax (RPGT) further. - Bernama

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Budget 2021 , RHB Research , fiscal , tax , property


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