Budget 2021 will be restructured according to economic situation

Mohd Shahar says the proposed amendments were not drafted in favour of any individuals to settle their outstanding debt with the IRB (Pic: Bernama)

Govt will explore financial resources in its ecosystem to ensure that the budget can be fully implemented

Pic by BERNAMA

THE government will restructure the expenditure under Budget 2021 if the economic situation in the country remains unstable next year.

During his wind-up speech for the Supply Bill (Budget) 2021, Deputy Finance Minister II Mohd Shahar Abdullah (picture) said 2021 will be a transition period for the country into a recovery phase after facing a crisis brought upon by the Covid-19 pandemic.

“However, if the economic situation in 2021 is still uncertain and there are needs to implement relief measures, the government will restructure the expenditure based on priority and it will explore financial resources in the government’s ecosystem to ensure the budget can be fully implemented and benefit the people,” he said in the Dewan Negara yesterday.

The upper house has passed the budget for next year with unanimous support from the senators after the third reading by Mohd Shahar.

The debate and winding-up by each ministry for the bill took five days after it was previously passed in the lower house on Dec 15.

In his debate, the deputy minister said the government brought out stimulus packages and economic recovery plans amounting to RM305 million, along with direct fiscal stimulus totalling RM55 million, which will have an impact on the ministry’s financial situation.

“However, all the measures announced in the stimulus packages are short-term and will not continue the federal government’s financial outlook in the medium and long terms,” Mohd Shahar said.

He added that income tax from companies and individuals increased 18% in 2010 compared to the collection made in 2009 due to the low-base factor that took place during the Global Financial Crisis in2009.

However, the projection for income tax from both companies and individuals next year will increase around 12%, he said.

“If we measure the income tax as a percentage against the GDP, in 2010 it came in at 7%, while for next year, it is projected to be 6.8%,” said Mohd Shahar.

He added that the pandemic has also reduced the government’s revenue to RM227.3 billion compared to the previous projection of RM244.5 billion.

For next year, the government’s revenue is projected to increase 4.2% to RM236.9 billion.

Of the total, tax revenue accounts for RM174.4 billion where direct tax will amount to RM131.9 billion, while revenue from indirect tax will come in at RM42.5 billion. Non-tax revenue is expected to be RM62.5 billion.

The government passed the budget in the Dewan Rakyat at its third reading with 111 in favour against 108 and one absentee.

A total of RM322.5 billion has been allocated for next year’s budget which is aimed at reviving economic activities following the downturn caused by the pandemic.

The Education Ministry is the biggest recipient of the budget with RM50.36 billion.