PETALING JAYA: Budget 2027 remains silent on two key cost-of-living protections that expire on Dec 31 – household electricity bill protection and Bank Negara’s interim measures on medical insurance premiums, says the Institute of Strategic Analysis and Policy Research (Insap).
This lack of clarity could leave more than one million households facing higher monthly bills from Jan 1, it said.
The government raised the electricity bill protection threshold from 600kWh to 800kWh on Sept 17 following higher household usage during the haze and hot weather.
Households within the threshold are exempted from the Automatic Fuel Adjustment (AFA), retail charge and service tax.
The temporary measure, which brought more than one million additional domestic users under the protection, can save a household using 800kWh up to RM47 a month.
However, Insap said the protection will revert to 600kWh on Jan 1 unless the government makes a further commitment.
“Families cannot plan their household budgets around relief that expires every few months.”
Insap noted that the Statistics Department recorded a 3.3% increase in the cost of electricity, gas and other fuels in August, which was the main contributor to higher housing costs for the month.
Insap urged the government to publish a standing rule on electricity bill protection that is linked to the AFA level, with its cost shown in the Budget.
It also proposed that tariff charges be imposed only on electricity consumption above the protected threshold, rather than on the entire month’s usage once a household exceeds the limit.
“Applying them only to usage above the protected level would remove the sudden jump in bills that households experience when they cross that line.”
On medical insurance, Insap said Bank Negara’s interim measures requiring insurers to spread premium increases over at least three years are due to end on Dec 31.
It said Budget 2027 did not specify what measures would replace the interim arrangement.
While MediAsas is scheduled to be introduced next year, Insap said its premiums remained indicative.
Under Budget 2027, Employees Provident Fund members aged below 55 could pay for MediAsas premiums using savings in Akaun Sejahtera.
However, Insap said this would shift healthcare costs to retirement savings.
It called for final MediAsas premiums and transition arrangements for existing policyholders to be announced before Dec 31.
“Any payment from EPF should remain voluntary and capped.”
Insap welcomed the increase in individual income tax relief from RM9,000 to RM12,000, the first revision since 2010, and the one percentage point cuts for two middle-income tax bands.
However, it said the revised relief did not fully account for inflation.
Based on the Consumer Price Index, Insap said RM9,000 in individual tax relief in 2010 would be worth about RM12,375 today.
It urged the government to index tax relief limits to inflation or require them to be reviewed within a fixed period.
The institute said relief measures must also be fiscally sustainable, noting that debt service charges are projected at RM61bil in 2027, or about 16% of government revenue, above the Finance Ministry’s 15% threshold.
