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Budget 2020 could have taxed the rich more

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The Budget was realistic, but it could have raised the minimum wage higher and taxed the rich more through more progressive taxes, says Ramon Navaratnam.

Budget strategy

Planning Budget 2020 would have been particularly challenging for several reasons.

The world economy is slowing down and maybe going into a recession. The budget had to be expansionary to counter the recession, but the budget deficit is large and national debt is quite huge.

Hence the Budget was faced with severe constraints. It could not be too expansionary. Nor could the budget deficit be cut as this would worsen the economic slowdown and cause more unemployment and a loss of general socioeconomic wellbeing. Thus the budget could only be mildly expansionary to consolidate and minimise the collateral damage of the coming economic slowdown.

This mildly expansionary budget strategy would thus be welcome by international rating agencies that are closely watching our deficits and debts.

If the budget strategy involved a strong expansion, we run the risk of being downgraded in our credit ratings, and investor and public confidence in our budget and economy would suffer badly!

Hence the strategy for Budget 2020 was right, proper and sustainable.

Budget theme: Shared prosperity vision

This would mean introducing measures to promote prosperity and growth:

  • The establishment of a special channel for Chinese investments is laudable. This will stimulate growth from Chinese investments that would otherwise be restrained.
  • The provision of RM1bn for local companies to break into the international market will encourage our businessmen to seek new markets abroad and not depend on the small local market.
  • Similarly, the RM1.1bn for public-private projects in economic zones in depressed areas like Perlis, Kuantan, Johore, Sabah and Sarawak will help spread development outside the crowded Klang Valley.
  • The allocation of RM21.6bn to expand internet coverage will boost prosperity.
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Revenues measures to strengthen the budget and reduce the deficit?

  • the tax increase for those earning more than RM2m is a progressive fiscal measure for sharing.

Sharing prosperity

  • The allocation of RM445m for bumiputera entrepreneurs will help share wealth. But we have to ensure genuine businessmen benefit and show clear outcomes.
  • The provision for women entrepreneurs will be especially welcome to ensure that prosperity is better distributed on the basis of gender.

Budget integrity

  • The reduction of the total budget RM292bn by 5.6% is a big cut. It is not clear whether this serious cut can be sustained and if a supplementary budget will have to be provided next year?


Under the circumstances, the Budget was realistic and pragmatic.

But it could have been more progressive: it could have taxed the rich more through more progressive taxes and charges like fees for public services like tolls, electricity and hospital charges.

Regrettably, no new structural changes were introduced in the Budget.

Hopefully, the budget proposals will be implemented using needs-based and not race-based policies. Then, there will be more national unity and harmony.

More could have been done for the following budget items:

The budget could have explained what the government plans to do about the following:

  • Minimum/living wages could have been raised higher to share prosperity
  • Corporate and income taxes should have been made more progressive
  • Estate and property gains taxes could have been raised
  • The cost of living could have been reduced by reducing or removing supply constraints such as approved permits, other permits and monopolies
  • Fees for imported labour could have been introduced to reduce foreign labour and to get our locals employed. The budget incentive of RM350 per month is not adequate to have much impact
  • Fees and charges, now imposed by the government for its services, could have been made more progressive so that the rich are charged higher fees as in road taxes and even water rates, in conjunction with state governments
  • Luxury taxes could have been introduced to share wealth – and why not?
  • The Budget is spread thin with a little for many
The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

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