Tax collection, recovery drive this year’s federal revenue up 22pc but expected to slow in 2023
KUALA LUMPUR, Oct 7 — This year’s federal revenue is expected to rise by 22 per cent driven primarily by increased tax collections and a rebounding economy, Putrajaya said today as it unveiled a record expansionary federal spending plan for next year.
Total projected revenue for 2022 is RM285.2 billion or 16.7 per cent of gross domestic product. Tax collection is the biggest contributor making up close to 70 per cent of total revenue, with this year’s collection expected to increase to 30.5 per cent from 25.7 per cent in 2021.
This year’s corporate tax collection is expected to put RM84.76 billion into the federal coffers. The estimated income tax collection, the second biggest contributor, would be RM30.6 billion. The projected collections for 2023 are higher, at RM88.7 billion and RM33.6 billion respectively.
Meanwhile, oil tax revenue for the year is estimated to be RM19.3 billion, a massive increase from 2021’s RM11.5 billion as geopolitical tension and a resurgent economy drives a global energy price rally.
But there is expectation that it could change in 2023 as prolonged tension and a tighter monetary environment fuelled by surging inflation could push most countries into recession. Putrajaya said it expects to earn RM16.18 billion from oil tax, RM3 billion less.
It projected total 2023 revenue to shrink by 4.4 per cent, at RM272.5 billion.
This year’s higher revenue, coupled with the planned reduction in operating expenditure, could explain why the government led by Prime Minister Datuk Seri Ismail Sabri Yaakob could table the highest federal spending plan to date, a record RM372 billion.
Over RM92 billion will be carved out for development, also the highest as the Umno-led coalition bids to woo hearts and minds ahead of a crucial national election.
