KUALA LUMPUR, Nov 6 — The allocation for Budget 2021 is projected to be worth RM330 billion, 10 percent higher than the RM297 billion Budget 2020.
PwC Malaysia deals partner, economics, and policy, Patrick Tay believes Budget 2021 is designed to sustain fiscal stimulus to help Malaysia get back into positive growth territory.
“Together with the monetary stimulus from Bank Negara Malaysia, we would expect Malaysia to achieve moderate growth in 2021,” he told Bernama.
Tay said depending on how much revenue the government expects to collect in 2021, this may result in a significant deficit north of the current projected 6.0 per cent to likely be around 7.0-8.0 per cent.
“No rocket science — a sensible COVID-19 (pandemic) budget will need time to address the issues of lives and livelihoods,” he said.
On lives, Tay said the government is expected to increase resource allocation to the public healthcare system, especially to frontliners, and to purchase personal protective equipment which is important to control and manage the COVID-19 incidences.
With the possibility of a vaccine available towards end of the Budget 2021 period, the allocation to help secure supplies is likely.
“And on livelihoods, we think government aid to small and medium enterprises (SMEs) and the rakyat should continue. So, expect continued allocations.
“Finally, with an eye on politics, it won’t be a surprise if the budget makes allocations to support Sabah as it battles COVID-19, Sarawak and the rural states up north and in the east coast,” he said.
On the Goods and Services Tax (GST), Tay said he feels the government will more likely signal its reintroduction when economic recovery has taken firm roots.
“The economist in me says that there is no time like the present to reintroduce the GST as a measure to broaden the tax base and to capture some revenues from the informal aka grey economy,” he said.
Tay said a sufficient lead-in time is important to ensure successful reintroduction such as a robust price monitoring system, including enforcement, knowledge building for the enforcement agencies and reduce compliance cost-quarterly submission.
Tay also suggested the government to reduce income tax rates, as well as provide cash vouchers to all the qualifying B40 households, Sales and Service Tax free holidays for at least three months to avoid tax pyramiding, and auto refund of input tax.
Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz will be tabling Budget 2021 in Parliament later today.