THE Government is confident of achieving its deficit target of 6.5% of gross domestic product (GDP) this year, Finance Minister Datuk Seri Tengku Zafrul Aziz said today.
He said Malaysia was on track to meet the target but much would depend on the country’s revenue performance, how far it can reprioritise spending, and the final GDP outcome.
“We (have) rationalised our expenditure in 2021 to accommodate the increase in the COVID-19 Fund to RM39 bil, which is to finance additional assistance and stimulus packages.
“So, in total, the overall deficit for this year is expected to be RM98.8 bil, up from the original budgeted amount of RM84.8 bil,” he said at the virtual Invest Malaysia 2021 Series 2 today.
Tengku Zafrul said all eyes would now be on the country’s second half-year performance.
Malaysia recorded a respectable 7.1% GDP growth in the first half of 2021 compared with a contraction of 8.4% in the same period last year, thanks to the effectiveness of the Government’s economic stimulus and financial aid programmes.
Tengku Zafrul said the third quarter 2021 GDP results would be announced next week and the Government was projecting weaker numbers given the various containment measures during that period.
However, he expressed confidence that a strong recovery would be recorded in the fourth quarter of 2021.
On taxation, Tengku Zafrul said the Government expected a stronger revenue collection in Q4 2021 in line with the reopening of the economy and success of the vaccination rollout.
“We already see an uptake in sales and service tax (SST) collection, in line with the reopening of more economic sectors, particularly in the services sector,” he explained.
“Cukai Makmur” is one-off
Tengku Zafrul also said that his ministry and the Environment Ministry were working together on the imposition of carbon tax, which was also in line with the Government’s initiative to widen its revenue base and reduce reliance on direct taxes.
He also assured that the government’s proposed “Cukai Makmur” (Prosperity Tax), to be implemented next year, would be charged on a one-off basis as the country was facing an extraordinary time and the new tax would be implemented in that spirit.
The tax on companies earning at least RM100 mil in profit was expected to have an impact on not more than 250 companies, Tengku Zafrul stated, adding that many big corporations had expressed their support for the temporary levy and it would not hurt their dividend payouts. – Nov 9, 2021.
