Analysts: Budget 2023 step in right direction for PM Anwar, but details need ironing out
KUALA LUMPUR, Feb 25 — Political analysts have praised Budget 2023 as a step in the right direction for Prime Minister Datuk Seri Anwar Ibrahim, saying it would help cement his reputation as a leader looking out for Malaysians who are struggling financially.
Assistant professor of political science at International Islamic University Malaysia, Syaza Syukri, said the Budget was on brand for Anwar and his reform agenda, and that it was clear he was trying to portray his government as a “people’s government”.
“Instead of simply just giving goodies to help the people, he is proposing a redistribution of wealth to achieve justice,” she said.
Among measures announced in Anwar’s Budget 2023 was the lowering of the personal income tax rate for those earning between RM35,000 and RM100,000 annually, by two percentage points.
Furthermore, the government will raise the tax rate of those earning between RM100,000 and RM1 million by 0.5 to two percentage points, depending on their income bracket.
Analyst Shazwan Mustafa Kamal agreed that the Budget appeared to be a good balance between Pakatan Harapan’s reformist ideals and the need for social protection and aid.
“The Budget appears to lay the seeds for potential reforms and avenues to broaden the tax base.
“In his speech, Anwar pledged to maintain subsidies and other government support for lower and middle-income groups, while broadening the revenue base through taxes targeting luxury goods and capital gains.
“Beyond that, Anwar also promised a consistent stance against corruption, cutting out leakages and the involvement of middlemen in procurements,” said the associate director of political risk, public policy and government affairs at consultancy Vriens & Partners.
However, “the devil will be in the details”, said Shazwan, stressing that the effectiveness of these measures would depend on how they are implemented.
In the same vein, Nusantara Academy for Strategic Research (NASR) senior fellow Azmi Hassan said that Anwar did not spell out how Budget 2023 would tackle a crucial public problem: food inflation.
“In his speech, Datuk Seri Anwar mentioned that the headline inflation last year was 3.3 per cent, which is one of the lowest globally, but after that, he mentioned that the inflation for consumer food inflation only was 5.8 per cent, which is very high.
“I think the strategies on how to reduce the consumer food inflation must be explained. There must be a strategy; if not, why did he mention 5.8 per cent?” he said, adding that food prices alone would make it difficult for the public to feel like inflation in Malaysia was low.
Furthermore, Syaza noted that income tax would not be increased for those earning more than RM1 million.
“I continue to disagree with the definition of T20 on how the RM100,000 annual income bracket would face a 0.5 per cent tax hike when they are not really rolling in wealth if they live in the Klang Valley,” she said, referring to the top 20 per cent of earners in Malaysia.
“I think Malaysia should tax more the T10.
“I guess the feeling is that they’re already taxed highly, and on top of that now, there’s the tax on luxury goods.
“So I guess the government feels they are already taxing the rich enough and anything more than that might draw pushback,” she said, adding that the M40 did not seem to benefit much aside from the tax reduction for their earning bracket.