The Budget for year 2015 has finally been announced on 10th October 2014.
GST exemption on petrol (RON95), diesel and LPG. GST will not be imposed on the first 300 unit of electrical bill. This means 70% of households will not pay GST on electricity usage. GST will also be exempted from the following items:-
i) fruits, local and imported;
ii) white bread and wholemeal bread;
iii) coffee powder, milk powder and coco powder;
iv) egg noodle, rice noodle and vermicelli;
v) 2,900 brands of medicines considered to be of national importance, including for heart disease, diabetes, hypertension, cancer and infertility;
vi) reading material,including workbook, children’s colouring books, text book, dictionary and religious texts;
GST & Personal Income Tax
With the implementation of GST, the Government intends to reduce the tax burden on the rakyat as follows:-
For individuals and households for year of assessment 2015:-
(i) Tax payers with family and income of RM4,000 per month will not have tax liability. As such, individual income tax rates will be reduced by 1% – 3%. With this measure, 300,000 individual taxpayers will no longer pay income tax;
(ii) Individual income tax will be restructured whereby the chargeable income subject to the maximum rate will be increased from exceeding RM100,000 to exceeding RM400,000.
The current maximum tax rate at 26% will be reduced to 24%, 24.5% and 25%.
To assist businesses, the following incentives and assistance will be provided:-
(i) Training grant of RM100 million provided to businesses for their employees to attend GST courses;
(ii) Financial assistance amounting to RM150 million provided to SMEs for the purchase of accounting software;
(iii) Accelerated Capital Allowance on purchase of ICT equipment and software; and
(iv) Expenses incurred for training in accounting and ICT relating to GST will be given additional tax deduction.
The Government had allocated RM588 million for various subsidies in 1994. This amount has increased to RM40.5 billion in 2014.
To improve the public finance position, the Government is committed to implementing subsidy rationalisation, particularly for petroleum.
At present, the Government allocates more than RM21 billion a year to subsidise RON95 petrol, diesel and LPG cooking gas. As a result, the allocation for subsidies has increased 14 times from RM1.65 billion in 2002 to RM23.5 billion in 2013, solely to maintain the low retail petrol price. This is due to the increase in number of vehicles from 13.6 million units in 2008 to 23.7 million units in 2013.
To ensure a more targeted subsidy and taking into account the rakyat’s awareness and readiness to subsidy rationalisation, the Government will develop a new mechanism for providing petroleum subsidy.
The new mechanism will be announced soon.
Youth and home ownership
The Government also aims to provide a comprehensive ecosystem for youth to increase their capabilities and progress in work, business and entrepreneurship as well as enjoy housing, recreational and sports facilities. For this, the Government will establish 1Malaysia Youth City with an allocation of RM100 million to fund three pilot projects in the Peninsula, Sabah and Sarawak.
Youth Housing Scheme which is a smart partnership between the Government, Bank Simpanan Nasional, Employees Provident Fund and Cagamas.
The scheme offers a funding limit for a first home not exceeding RM500,000 for married youth aged between 25 and 40 years with household income not exceeding RM10,000. The maximum loan period is 35 years.
Under the scheme, the Government will provide monthly financial assistance of RM200 to borrowers for the first two years to reduce the burden of monthly installments. The Government will also give a 50% stamp duty exemption on the instrument of transfer agreements and loan agreements.
The Government will also provide a 10% loan guarantee to enable borrowers to obtain full financing including cost of insurance. Borrowers can also withdraw from EPF Account 2 to top up their monthly installment and other related costs.
It is offered on a ‘first come first served basis’ for 20,000 units only.
Currently, gains from the disposal of property under the Real Property Gains Tax Act 1976 are assessed formally.
The Government has implemented the Self-Assessment System for individual and company income tax effective from the year 2001 and 2004, respectively.
In tandem with the Government’s aspiration to modernise the tax system and given that people are more responsible, it is proposed that tax on gains from the disposal of property be self-assessed by the taxpayer effective from the year 2016. Nonetheless, it is unclear how the system works and there has been no clear guidelines in respect of implementation.
Bonus for Civil Servants
For civil servants, a half-month bonus with a minimum payment of RM500 is to be paid in Jan 2015. Government pensioners will also receive special financial assistance of RM250.
The allowance of members of Parliament of Dewan Rakyat will be increased from the equivalent grade 54 to equivalent grade Jusa C, consistent with their responsibility.
The allowance of members of Parliament of Dewan Negara will be increased from equivalent grade 48 to equivalent between grade 54 and Jusa C.
Salaries and allowances of the Speaker of Dewan Rakyat and Speaker of Dewan Negara as well as their respective Deputies will be increased effective Jan 1, 2015.
Government will review the salary scheme of members of the administration and make a decision at an appropriate time. This includes the Prime Minister, the Deputy Prime Minister, Ministers and Deputy Ministers.
For civil servants wanting to obtain financing for houses, the minimum eligibility for housing loans will be increased from RM80,000 to RM120,000 and the maximum eligibility limit from RM450,000 to RM600,000. This will take effect Jan 1, 2015.
BR1M is UP again
Bantuan Rakyat 1Malaysia (BR1M) will be increased from RM650 to RM950. This is for households with a monthly income of RM3,000 and below. Payment will be made in three instalments of RM300 each in Jan and May, and RM350 from Sept 2015.
For households with a monthly income between RM3,000 and RM4,000, the Government will increase BR1M from RM450 to RM750. This assistance will be disbursed in three instalments that is RM200 to be paid in Jan and May while the balance of RM350 from Sept 2015.
For single individuals aged 21 and above and with a monthly income not exceeding RM2,000, BR1M will be increased from RM300 to RM350 a year.
The National Housing Department (JPN) to build 26,000 units under the People’s Housing Programme (PPR) with an allocation of RM644 million.
Syarikat Perumahan Negara Berhad (SPNB) to build 12,000 units of Rumah Mesra Rakyat (RMR) and 5,000 units of Rumah Idaman Rakyat.
SPNB will also build 20,000 units of Rumah Aspirasi Rakyat on privately-owned land.
Government has agreed to extend the 50% stamp duty exemption on instruments of transfer and loan agreements and increase the purchase limit from RM400,000 to RM500,000. The exemption will be given until Dec 31, 2016.
The Government also agrees to improve Skim Rumah Pertamaku under the purview of Cagamas by raising the ceiling price to RM500,000 in line with the stamp duty exemption. In addition, the age of borrowers to qualify for the scheme will be increased from 35 to 40 years.
80,000 housing units will be built under the 1Malaysia People’s Housing Programme (PR1MA) with an allocation of RM1.3 billion.
The ceiling of household income is raised from RM8,000 to RM10,000 for applicants of PR1MA.
A Rent-To-Own Scheme will be introduced specifically for individuals who are unable to obtain bank financing.
Infrastructure items – Infrastructure Projects
In 2015, several infrastructure projects will be implemented:-
(i) Construction of the 59-km Sungai Besi – Ulu Klang Expressway (SUKE) at a total construction cost of RM5.3bil;
(ii) Construction of the 276-km West Coast Expressway from Taiping to Banting at a total construction cost of RM5bil;
(iii) Construction of the 47-km Damansara – Shah Alam Highway (DASH) at a total construction cost of RM4.2bil;
(iv) Construction of the 36-km Eastern Klang Valley Expressway (EKVE) at a total construction cost of RM1.6bil;
(v) Upgrading the East Coast railway line along Gemas – Mentakab, Jerantut – Sungai Yu and Gua Musang – Tumpat with an allocation of RM150mil;
(vi) Construction of the 56-km Second MRT Line from Selayang to Putrajaya at an estimated cost of RM23bil; and
(vii) LRT 3 Project, which will link Bandar Utama to Shah Alam and Klang, at an estimated cost of RM9 billion, will be implemented.
The Pengerang Integrated Petroleum Complex project with a total investment of RM69 billion is expected to create more than 10,000 job opportunities.
Additionally, to develop the electric vehicle manufacturing industry in Malaysia, a Sustainable Mobility Fund of RM70mil will be established under SME Bank. Initially, 50 electric buses will be introduced.
Encouraging Establishment of Principal Hub
For this the Government will continue its efforts to further increase the number of multinational companies’ global operational centres in Malaysia. In line with this, customised incentives for Principal Hubs will be introduced early next year.
Spurring Creative Industry
To develop creative industries such as animation, filming, designing and cultural heritage, the Government has allocated RM200 million to MyCreative Ventures in 2012. To further promote the industry, a Digital Content Industry Fund will be set up under the Communications and Multimedia Commission with an allocation of RM100 million.
Increasing Capacity of High-Speed Broadband
The High-Speed Broadband (HSBB) will continue to be implemented in areas of high economic impact, covering state capitals and selected major towns nationwide. A sum of RM2.7 billion will be spent over the next three years to build 1,000 new telecommunication towers and laying of under sea cables.
Increasing equity ownership of Bumiputeras
In the context of corporate equity ownership, the Bumiputera have yet to achieve the 30% target.
Meanwhile, their effective control over corporations is currently only around 10%. Hence, EKUINAS will be allocated RM600mil to increase bumiputera ownership in private companies and GLCs. To date, EKUINAS has cumulative investments of RM2.3bil in various sectors.
For Bumiputera SMEs, among the initiatives under 2015 Budget shall include the following:-
Lembaga Tabung Haji will allocate RM200mil for the establishment of the shariah-compliant Restricted Investment Account (RIA) under Bank Islam. The purpose of this account is to provide financing and credit between RM50,000 and RM1mil from January 2015; and Second: Amanah Ikhtiar Malaysia (AIM) will use internal sources of RM1.8bil for financing to benefit 346,000 Sahabat AIM.
The Government is concerned and gives importance to the development and improving the welfare of the rakyat in Sabah and Sarawak in the national development agenda.
As the North-South Highway project has transformed the development from Perlis to Johor, the Government intends to start construction of the 1,663-km Pan-Borneo Highway comprising 936 km in Sarawak and 727 km in Sabah at a total construction cost of RM27bil.
To improve the public transport system, the Government will introduce the following programmes:-
(i) Provide intercity bus services to those residing outside Kuala Lumpur (KL) but work in KL. The service will be offered with a discounted monthly fare of 30%. For a start, three bus routes will be operational namely the Rawang-KL; Klang-KL and Seremban-KL;
(ii) Provide Electric Train Service (ETS) for Ipoh-Butterworth route starting April 2015; and
(iii) Upgrade stage bus services in several states through a contracting system with existing bus companies. The programme will be implemented in phases in Kuching, Ipoh, Seremban, Kuala Terengganu and Kangar.
Water supply sources will be diversified through groundwater exploration, and reuse of treated water for industries and agriculture as well as expanding the use of storm water retainer system. To address water supply shortage in the Klang Valley, the construction of Air Langat 2 Water Treatment Plant will be expedited. Costing RM3 billion, the plant will increase the supply of treated water to 1,130 million litres daily.
In addition, the Government will intensify efforts to address the problem of non-revenue water. A sum of RM112mil is allocated for setting up leakage control zones as well as detecting and repairing leaking pipes.