THE national budget is expected to continue its focus on the people’s welfare, ongoing and improved assistance, as well as national infrastructure development.There is a need for the government to focus on middle-income earners in Budget 2024 as the current initiatives to increase wages tend to focus mainly on the Bottom 40% (B40) group.
Middle-income citizens face challenges in improving their earning potential as the progressive wages suggested by the government are of little help to them presently.
The middle class needs assistance and to be empowered as many have been affected by the Covid-19 pandemic, with 20% of the Middle 40% group falling to the B40 category.
They are the economy generators and workforce, and they are the ones who will spend in the local economy.
Further, allowing flexible working arrangements to reduce working hours and freeing up some time for them to earn secondary incomes will help considerably.
Budget 2024 could perhaps introduce better incentives to encourage flexible working arrangements in work-from-home, freelance, and gig economy jobs, sharing economy platforms, and micro-enterprises to help people earn secondary incomes.
The government is focused on raising the income levels of Malaysians as this will obviously have a direct impact on their overall quality of life.
Statistically, about half of employed Malaysians earned just RM2 above the poverty line of RM2,208, with the majority of households falling in the low-income category.
The government reaffirms its desire to continue investing in infrastructure to support various initiatives to alleviate poverty such as the people’s income initiative.
These initiatives have been lauded as the country needed to focus on economic development and not just on the growth of its gross domestic product (GDP) and gross domestic income (GDI).
Striking a better balance between economic development and growth will not only help generate revenue for the government, but would also allow the country to redistribute income to the people.
Economic growth only increases GDP and GDI.
However, economic development means not only an increase in quantitative terms, but also improvements in terms of quality of life, sustainable livelihood, and eradication of poverty.
It is noted that several ministries have been actively monitoring and evaluating Rahmah sales (introduced in Budget 2023) conducted nationwide to assess the need for increasing subsidy allocations for 2024.
A total of RM66bil has been allocated for various subsidies, including cooking oil, eggs and chicken this year.
Additionally, to help alleviate the people’s cost of living, the government added an extra RM150mil to the Rahmah initiative with the aim of reducing the prices of essential goods by 10% to 30%.
The government also provides RM8bil in cash contributions via Rahmah cash aid. These measures are meant to ease the burden on the people due to the current global economic conditions.
Prime Minister Datuk Seri Anwar Ibrahim said details on the implementation of targeted subsidies will be presented during the upcoming second Madani budget in Parliament next month.
The Prime Minister assured that any subsidy rationalisation would not burden the middle and lower-income groups.
For most taxpayers, when filing their tax returns, they would look for information on the tax reliefs, deductions, and rebates that are claimable so that they would pay less tax.
It is worth highlighting that tax reliefs, deductions and rebates are actually three different things meant to reduce the aggregate income, chargeable income, and amount of tax charged, respectively – ultimately letting you enjoy a lower tax rate and pay less in tax altogether.
There needs to be a rationalisation of the many personal reliefs into broader and easily understood categories.
There have been instances where taxpayers have claimed every single relief available, possibly because of a lack of understanding of the eligibility criteria.
Speaking of personal reliefs, the government could consider introducing tax relief for financing planning fees in Budget 2024, which could help boost knowledge and awareness of financial sustainability among Malaysians.
Such incentives will support the government’s aim to make the rakyat more financially savvy by seeking advice from qualified financial advisers based on their needs, covering financial management aspects such as retirement, savings, debt settling and wealth goals.
Malaysia should aim to attract talent from around the world to help boost our capabilities.
The country is blessed with many exceptional public and private universities.
In 2022 there were 170,000 foreign students enrolled in Malaysian universities and colleges.
Unfortunately, this talent is lost despite having spent three years educating them because they are not allowed to work in Malaysia for a certain period after graduation, visa free.
Many developed countries do this to boost their talent ranks but, frustratingly, we do not. We should endeavour to keep this talent to help grow the Malaysian economy.
Women-owned businesses are a major driver of economic growth.
In Malaysia, women-owned businesses contribute an estimated 30% to the country’s GDP.
Supporting women-led businesses can help to boost economic growth and create more job opportunities for women, which can lead to a more equitable society.
Harvindar Singh is Managing Partner at Harvey & Associates. The views expressed here are the writer’s own.