KUALA LUMPUR, Nov. 2 (Xinhua) — Malaysia’s government led by Prime Minister Mahathir Mohamad on Friday proposed its first budget after coming to power in the May general election, allocating 314.55 billion ringgit (75.49 billion U.S. dollars) for the 2019 budget.
The new budget will be up from last year’s 280.25 billion ringgit.
In unveiling the budget, Finance Minister Lim Guan Eng said it was different from all previous national budgets as it would be a zero-based budget unlike previous budgets which were tweaked from previous ones.
“This avoids providing an allocation for items that may have become unnecessary over time and minimizes the practice of ‘spending for the sake of spending’ towards the end of the year to finish up a budget allocation.”
Lim said the budget was largely focused on savings for the government and the introduction of new taxes and the raising of existing taxes to boost revenue, but the welfare of the people would not be forgotten.
Among the measures is a sugary drinks tax imposed on sugary drinks including fruit and vegetable juices containing sugar.
The Real Property Gains Tax will be raised for locals from 0 percent to 5 percent except for low-cost homes and foreigners will have to pay 10 percent up from the current 5 percent.
Mahathir’s government has said it would be focusing on alleviating the country’s debt accumulated during the previous government.
Lim also announced that the fiscal deficit this year was revised up to 3.7 percent of its gross domestic product (GDP), from 2.8 percent previously, saying the early figure did not reflect the true deficit amount, as many expenses were off the balance sheet and despite the government’s best efforts, it is not realistic to achieve a deficit of 2.8 percent for 2018.
Following the efforts to regain fiscal consolidation momentum during the adjustment period, the fiscal deficit is expected to reduce to 52.1 billion ringgit (12.51 billion U.S. dollars) or 3.4 percent of GDP in 2019.
After an unexpected victory in May election, Mahathir’s government has withdrawn the goods and services tax which was introduced by the former Prime Minister Najib Razak. The move has resulted in an estimated revenue shortfall of 21 billion ringgit (5.04 billion U.S. dollars).
For 2018, the government expects the reduction will be cushioned by additional revenue, particularly underpinned by the reintroduction of the Sales and Services Tax (SST), dividend and oil-related revenue that is supported by higher crude oil prices.