Welcome relief as household disposable income increases

KUALA LUMPUR: It was indeed quite a mouthful but the theme of Budget 2018 says it all.

“Prospering an Inclusive Econo­my, Balancing Between Worldly and Hereafter, For The Wellbeing of the Rakyat, Towards the TN50 Aspiration” – that was the theme of the Budget speech that was deli­vered on Oct 27 last year by Prime Minister Datuk Seri Najib Tun Razak, who is also Finance Minister.

He made clear at the start of his speech in the Dewan Rakyat that he wanted to bring “good and happy news, which will put smiles on every face”.

The Government, he said, would continue to increase household disposable income as well as narrow the income gap in the country.

One of the measures to increase disposable income was the reduction of individual income tax rates of two percentage points for those in the income tax band of between RM20,000 and RM70,000.

Bernama quoted Second Finance Minister Datuk Seri Johari Abdul Ghani as saying in November last year that the two percentage-point reduction in individual income tax rate as announced in Budget 2018 would reduce government revenue by RM1.3bil.

Budget 2018 also paid attention to the estimated 2.3 million tax­payers in the country, especially those in the M40 group or the middle-income range households with income of less than RM9,000.

According to the Prime Minister, the 2016 Report of Household Income and Basic Amenities Survey pointed out that:

> Income per capita has increased from RM27,819 in 2010 to RM40,713 in 2017. This is expected to rise to RM42,777 this year;

> Monthly median income has gone up from RM4,585 in 2014 to RM5,288 in 2016;

> For the B40 household income, the monthly median income has increased from RM2,629 to RM3,000 between 2014 and 2016; and

> Household income distribution in Malaysia has improved with the Gini coefficient reduced from 0.441 in 2009 to 0.399 in 2016, the lowest in the history of Malaysia.

“This reflects the narrowing income gap as the country progresses towards a more equal distribution,” Najib said.

And to encourage women on a career break of at least two years back into the workforce, Budget 2018 has outlined that their earnings on maximum 12 months consecutive salary be given personal income tax exemption.

This incentive is available for women who return to the workforce between the year of assessment 2018 and 2020.

The Prime Minister, in conclu­ding the roll-out of Budget 2018, described it as “the mother of all Budgets”.

“Indeed, this Budget is the collection of various premises that form the basis of a comprehensive Budget, taking into account the needs of all levels of society.”

This Budget, he said, was the most inclusive to have been tabled.

Meanwhile, the IRB has stressed that its objective is “to implement an effective, fair and equitable tax management system”.

According to its website, the board’s slogan is “Together We Develop The Nation”.