KUALA LUMPUR: The increase in individual income tax relief to RM12,000 is long overdue and will provide significant relief to households, says MCA president Datuk Seri Dr Wee Ka Siong (pic).
The Ayer Hitam MP said the relief limit had remained unchanged for 16 years, and raising it would allow taxpayers to claim higher deductions from their taxable income, leaving them with more disposable income.
“I think that will help liquidity and disposable income,” he told reporters at the Parliament lobby after Budget 2027 was tabled yesterday.
Dr Wee, who has called for the increase over the past few years, said RM12,000 was the minimum amount he had proposed.
“Exactly what I said: it should be increased to at least RM12,000, if not RM15,000. So today, we see at least this good effort.”
Dr Wee has raised the issue in Parliament since 2023 and reiterated his call in July last year for individual income tax relief to be increased to RM12,000 from RM9,000.
He had said that RM12,000 is the bare minimum, adding that the relief should be gradually raised to RM15,000 to take into account the rising cost of living and inflation.
He also welcomed the income tax reduction for small and medium enterprises (SMEs), saying the Budget included various measures to assist the M40 and B40 income groups.
On the broader economy, Dr Wee said attention should now turn to ensuring prudent expenditure and effective implementation of the budget.
On the Education Ministry receiving the largest allocation of nearly RM69bil, he said this is nothing new.
“There has not been a year when the Education Ministry was not number one. It is just that the amount keeps increasing.”
He noted that the ministry’s share of the overall budget had remained at around 18% to 20%, with a substantial portion of its allocation going towards civil servants’ salaries.
Asked whether the RM100mil allocation for Chinese national-type schools was sufficient, Dr Wee said similar amounts had been allocated when Barisan Nasional was in power.
“Barisan used to give RM100mil as well, in 2012 and 2013.
“Most of the years, it was easily RM50mil. This year, it is RM100mil,” he said.
When tabling Budget 2027, Prime Minister Datuk Seri Anwar Ibrahim, who is also Finance Minister, announced that the individual income tax relief limit had been raised to RM12,000 from RM9,000, which was last revised in 2010.
Anwar also announced a one-percentage-point reduction in the resident individual income tax rate.
Finance Minister II Datuk Seri Amir Hamzah Azizan said about 5.16 million taxpayers would pay less tax following the increase in the relief limit.
He said the ministry had reviewed the relief in view of the rising cost of living.
Amir Hamzah said the M40 group had also benefited from the targeted Budi95 and diesel subsidy programmes, which had helped reduce leakages to foreign buyers and curb smuggling.
He added that certain forms of assistance, including aid for schoolchildren, were provided regardless of income group.
On SMEs, he said the government had responded to feedback from businesses facing pressure by providing cash flow support and tax cuts.
“SMEs are an important backbone of the country. They make up 94% of companies in Malaysia and provide jobs for 48% of Malaysians.”
He added that a minimum wage for semi-skilled workers would also be introduced.
“This will help push forward labour reform, which is important for the country.”
Amir Hamzah said year-to-date economic growth stood at 5.7%, while the unemployment rate had fallen to around 3%.
“But these figures alone are not enough. Our effort in Budget 2027 is to ensure the spillover from the country’s success as a trading nation reaches the people.”
