KUALA LUMPUR (Oct 10): The Madani government’s fifth national budget tabled in Parliament on Friday (Oct 9) by Prime Minister Datuk Seri Anwar Ibrahim had been anticipated to be loaded with “goodies” as the 16th general election is expected in a year or so.
With the theme “Reaching for the skies, while anchored on our values” and a behemoth size of RM459.84 billion, it did not disappoint. For the man in the street, it addressed the issue of the higher cost of living that has been a pain point for many. The small and medium enterprises’ (SMEs) grouses about higher operating costs were also addressed.
Some have described it as a “really generous” budget with the proposed tax rate cuts for the middle-income group and SMEs, as well as the increase in personal tax relief, on top of a continued RM200 cash aid for Malaysians and special financial assistance of RM1,500 for civil servants, among others.
“I think it’s hard to shrug off the sentiment that this is an election-friendly budget. Irrespective of that, I must say the measures, while generous, are addressing key lingering issues, especially related to wages, consumption and productivity,” said CGS International economist Nazmi Idrus.
The measures proposed under the Budget 2027 are possible largely because of the fiscal reforms that have been put in place in recent years.
“Budget 2027 is possible because much of the difficult fiscal work done in recent years, with subsidy rationalisation, expanded tax coverage and broadened revenue base. The deficit continues to narrow to 3.3% of GDP even while support is widened, which underscores the commitment to consolidation,” said Michelle Chia, head of research at CIMB Treasury and Markets Research.
More than that, the measures attempt to make real for the people the economy’s strong headline growth.
Notably, federal government revenue collection is projected to reach RM363.6 billion in 2026, higher than the original estimate of RM343.1 billion, said the prime minister in his speech. Federal tax revenue for 2026 was revised higher to RM280.76 billion, from RM270.38 billion announced during the last budget. In 2027, the federal revenue is expected to increase further to RM380.8 billion.
The prime minister did not fail to remind everyone that the Madani government had ventured where previous administrations dared not go — removing blanket subsidies and utilising targeted subsidies for better resource allocation.
He highlighted that targeted subsidies have contributed to higher allocation for cost of living assistance under the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara) programmes for the people, for whom the aid will increase to RM16 billion under Budget 2027, from RM15 billion previously.
What stood out for many in Budget 2027 is the cut in income tax rate for the middle-income group.
The government proposed a 1% reduction in personal income tax rate for resident taxpayers with chargeable income of between RM70,000 and RM150,000.
What else is new under Budget 2027?
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