Was Budget 2014 a hit or miss? iMoney

Was Budget 2014 a hit or miss?
iMoney | 9:25AM Oct 26, 2013

Here is how Budget 2014 fared against some of the predictions made by budget watchers, according to finance website iMoney.

Hit: GST will be implemented

It is now confirmed that the most talked about Goods and Services Tax (GST) will be implemented on April 1, 2015 at 6%. This will replace the Sales and Services Tax (SST). In contrast to SST, where there is a possibility of double taxation, GST extinguishes that possibility altogether.

GST rate: At 6%, it is the lowest rate among all Asean countries, which have rates from 7% to 10% across the board.

Offset package: To counter financial burdens on the lower-income earners during the transition period, the government will be giving BR1M recipients an additional RM300 one-off cash assistance.

Income tax alteration: Personal income tax will be reduced by 1% to 3%. The maximum rate for income tax will also be increased from exceeding RM100,000 to exceeding RM400,000 with the tax rate reduced from 26% to 24% (above 100,000), 24.5% (above 250,000) and 25% (above RM400,000). Corporate and SME income tax will be also be reduced by 1%.

To further help the lower-income group, a considerable number of essentials are exempted from GST, such as food items like sugar, rice, flour, lentils, salt, herbs, and even salted fish, piped water, public transportation and the first 200 units of electricity per month for domestic users.

Other exemptions include issuance of passports, licences, healthcare and education services.

Hit: There will be a hike in RPGT

The real property gains tax (RPGT) announced is even stricter than the pre-2007 rates but will it be effective? In a bid to encourage home ownership the prime minister has reverted the RPGT rate to 30% on properties sold within three years.

"I hear the grouses of the rakyat who wish to own a comfortable home, especially from those in the low and medium-income groups. Various concerns have often been raised, such as soaring house prices, inadequate supply of houses and difficulties in getting financing," said PM Najib Razak when tabling the Budget 2014 today.

A 20% and 15% RPGT rate is also imposed on properties sold within four and five years respectively, and 0% for properties sold from the sixth year onwards.

To make it even stricter, non-citizens are imposed a 30% RPGT rate for disposal of properties within the holding period of up to five years, and 5% for the sixth year onwards.

Miss: Handouts will be less than before

Najib announced a total allocation of RM4.6 billion to implement the 1Malaysia People's Aid (BR1M) programme next year, expected to benefit 7.9 million recipients.

Households with monthly income of RM3,000 and below will receive RM650, an increase of RM150 (30%), while singles aged 21 and above with who earn less than RM2,000 will get RM300, an increase of 20% from RM250.

In addressing the cost of living among the middle-income group, BR1M will be extended to households with a monthly income of between RM3,000 and RM4,000.

Hit: Rising crime rate will be addressed

The government has allocated RM450mil under the National Key Result Areas (NKRAs) on Crime Reduction to reduce the crime index.

The budget allocated is for the Royal Malaysia Police (PDRM) to increase the number of police personnel for patrolling and combatting crime, and also to upgrade police headquarters, to purchase latest equipment and motorcycles for the Motorcycle patrolling unit.

An additional of 496 units of Closed Circuit Television (CCTV) cameras will also be installed to prevent street crimes at known crime hot spots in Peninsular Malaysia, Sabah and Sarawak.
Will the Budget 2014 make a difference to the country's economy and the rakyat's cost of living? What will it do to your personal finances?

Find out if you will be better or worse off using iMoney's Budget Calculator.

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