The projection made is based on the market conditions which consider the development of Covid-19 pandemic and economic recovery
pic by TMR
MALAYSIA’S tax revenue projection for 2021 is estimated based on the anticipated rise in the country’s employment rate of 1.8%, said Deputy Finance Minister II Mohd Shahar Abdullah.
He told the Dewan Rakyat yesterday that the projection made for next year is based on the market conditions which consider the development of the Covid-19 pandemic, as well as economic recovery.
“The projection for next year is based on the market condition expected during that time. We forecast the employment rate to increase to 1.8% next year, while unemployment will reduce from 4.2% to 3.5%,” he said.
Mohd Shahar added that the estimation considers the income tax of up to 30% of the employed individuals in 2021.
He was replying to MP Wong Chen (Pakatan Harapan-Subang) who asked about the government’s revenue projection, which is deemed too optimistic by several quarters as it exceeds the revenue in 2019.
Wong said the government should do a budget recalibration when the Parliament convenes in March next year to accurately assess the country’s financial position.
“It does not make any sense that the government expects to collect more tax revenue than in 2019, a time when there was no pandemic.
“Next year, we do not even know if we have the Covid-19 vaccine, or have enough supply of it,” he said.
Mohd Shahar said the federal budget and its estimations were formulated according to the valid statistics by official bodies, which had given the government the confidence to table it.
“Malaysia is among the top 20% of countries with the highest GDP, which is an indicator that gives us a broader view.
“We would not table the expansionary budget if we do not have confidence in the future economic performance,” he said.
He added that lawmakers from both parties could provide the checks and balances for the government, should the economy not perform as well as expected.
“We are pleased with the Finance Ministry who worked hard to ensure all views, including from both parties, were taken into consideration in drafting the budget and ensure our economy achieves the projected growth,” he said.
According to estimates tabled under Budget 2021, the government is expected to collect RM143.9 billion next year through direct tax.
The amount accounts for 40.9% of the federal budget and 55.7% of total government revenue.
Out of the direct tax, RM65 billion will derive from corporate tax revenue next year and about RM42 billion from personal income tax.
Meanwhile, indirect tax revenue is expected to contribute 17.9% to the revenue, while non-tax revenue will contribute 22.4%.