Finance Ministry envisages 4.4% reduction in Govt revenue in 2023


Bajet_2023_Logo(FINAL)_EN

KUALA LUMPUR: The Federal Government's revenue collection is envisaged to decrease by 4.4% in 2023 to RM272.6bil or 15% of Gross Domestic Product (GDP) due to anticipated lower non-tax revenue collection.

The non-tax revenue in 2023 is expected to decline by 23% year-on-year to RM67bil due to lower dividends from government entities, the Finance Ministry said in its Fiscal Outlook and Federal Government Revenue Estimates 2023 report released on Friday (Oct 7).

"Tax revenue remains as the major contributor (75.4% of the total share) and anticipated to grow moderately by 3.7% to RM205.6bil, in line with the projected slower economic recovery," the ministry said.

It said direct tax was estimated to increase by 3.5% to RM152.4bil, representing 74.1% of total tax revenue with the bulk of the increase is attributed to better collection expected from companies' income tax (CITA) and individual income tax.

"The higher CITA, estimated at RM88.9bil, is in line with stable corporate earnings prospects as well as the Prosperity Tax due to be collected in 2023.

"Similarly, individual income tax is expected to grow by 9.8% to RM33.6bil on account of steady wage growth and anticipated further strengthening of the job market," it said.

Besides that, it said revenue from other direct tax comprising of stamp duty, Real Property Gains Tax (RPGT) and other taxes was expected to register RM9.9bil consistent with the continuous growth of residential building sub-sector, increased supply of affordable houses and the government's initiatives to address property overhang.

The ministry said revenue from indirect tax is estimated to increase by 4.3% to RM53.2bil in tandem with steady consumption and trade growth.

It said sales and service tax (SST) was forecasted to record RM32bil or about 1.8% of GDP of which, sales tax and service tax are projected to increase to RM16.3bil and RM15.7bil, respectively, while excise duties are expected to improve to RM12 billion or 0.7% of GDP.

The Finance Ministry said the expected increase in service tax would be mainly from the tourism sector in anticipation of higher tourists arrival in 2023 supported by the implementation of the Tourism Recovery Framework.

It said the lower collection for non-tax revenue in 2023 was due to lower proceeds from investment income, particularly dividend from Petroliam Nasional Bhd (Petronas), which was projected to be lower at RM35bil.

However, it said licences and permits was expected to increase steadily by 3.4% to RM13.8bil despite lower contribution from petroleum royalty and the increase was mainly driven by motor vehicle licences and levy on foreign workers.

Meanwhile, it said the annual dividends from Bank Negara Malaysia and the Retirement Fund Incorporated (KWAP) were projected at RM5bil and RM3bil, respectively

In 2023, it said petroleum-related revenue was expected to register RM58.9bil or 21.6% of total revenue in line with the assumption of lower global crude oil prices averaging at US$90 per barrel.

It said non-petroleum revenue was also projected to increase by 3% to RM213.7bil supported largely by CITA, individual income tax and SST, in tandem with sustained trade and economic activities.

The ministry said as a percentage of GDP, non-petroleum revenue is expected to remain resilient at 11.8%.

"The government is committed to accelerate efforts to execute the Medium-Term Revenue Strategy (MTRS), rationalise tax incentives, diversify revenue resources and enhance tax compliance," it said.

It said the planned fiscal reforms, including the enactment of the Fiscal Responsibility Act, would ensure the country's fiscal and debt sustainability in the medium and long term.

"These reforms will improve revenue generation, which will facilitate the government to pursue the national aspiration of becoming a high-income nation," the ministry added. - Bernama

Article type: free
User access status:
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!
   

Next In Nation

Cops arrest man for stealing equipment from restaurant owned by actor
Three killed, six injured in car-van collision in Kluang
Ten rescued after being trapped at waterfall in Batang Kali
Flood preparedness notice issued for six states
Motorcyclist killed in accident with another motorcyclist
Give priority to capable civil servants for key posts, says Cuepacs
Workshop fire damages four vehicles in Johor
Perikatan needs CSA to become constructive opposition, says Saifuddin
More time needed before unveiling leaner Cabinet, says Anwar
Anwar wants cops to take action against those who falsely accuse him, says Fahmi

Others Also Read