By Danial Azhar and Ashley Tang
KUALA LUMPUR- Malaysia will introduce a slew of new taxes, cut subsidies for a widely used fuel, and raise the minimum wage from next year, Prime Minister Anwar Ibrahim said on Friday as he announced a record budget spending plan of 421 billion ringgit ($98 billion).
Anwar said the government was on track to narrow the deficit to 3.8 percent of gross domestic product (GDP) next year from an estimated 4.3 percent in 2024.
“Next year, the fiscal reforms will be more aggressive and inclusive, with the progressive expansion of tax revenue and the targeting of subsidies for those most in need,” Anwar, who is also finance minister, told parliament.
Since taking office in 2022, Anwar has sought to trim a hefty subsidy bill and improve tax collections to reduce dependency on oil and gas revenues, with a medium-term goal of cutting the fiscal deficit to 3 percent of GDP.
This year the government cut blanket subsidies for diesel, electricity, and chicken, among others, as it moves to a targeted approach that mainly helps the needy.
Anwar said on Friday that policy would be extended to the RON95 transport fuel in the middle of 2025.
On the revenue side, the government will progressively expand the sales and services tax from next May, widening it to include commercial services, non-essential goods and premium imports such as salmon and avocados, Anwar said.
It has proposed a tax on dividend incomes above 100,000 ringgit at a rate of 2 percent and to enforce a global minimum tax from next year.
Excise duties on sugary drinks will be raised in stages from January to help reduce national obesity and diabetes rates, while a carbon tax on the iron, steel and energy industries will be implemented by 2026, Anwar said. – Reuters
