In less than 4 hours, Malaysia Prime Minister Abdullah Badawi will present his budget for the year 2008. Expected to be Election-Budget, the budget is expected to contain lots of goodies or sweeteners to appease voters – especially to the civil servants who constitute the bulk of the voters.
FinanceTwitter had on Tuesday, 4th Sept 2007, opened the Pre-Budget Poll inviting all the readers to participate and contribute their wish-list (Pre-Budget 2008 – What’s your wish? Take a Vote). Below is the summary of what the readers would like to have based on the 6 choices randomly selected by FinanceTwitter. Interestingly nobody present their wish other than the one prepared, even though there’s an option for “Other” of which readers can type in their wishes.
So, what can we conclude from this little simple poll? Quite a number, if you were to analyze it out of the box.
- Firstly, based on the number of votes against the actual readers, it is assumed only 20% of the readers actually care to vote. Either the readers are ignorant about how the budget could affect their life or they simply don’t care to vote brings us to another question. Does this co-relate to the actual pattern of voters in the coming general election? Could this translate to the fact that only 20% knows what or who they’re voting for during the general election with the remaining 80% are fence-sitting voters?
- Secondly there’s no doubt the majority of the voters would like to see their personal income tax be reduced – kinda no-brainer considering that nobody likes to pay more tax to the government.
- The second place has 3 winners namely reduce costs on medical expenses, higher relief for wife and children and reduce corporate tax. This result also means voters are aware or already bitten by the escalating costs of health-care and at the same time hope to have more take-home-money from the immediate family-members’ relief.
- Surprisingly EPF withdrawal for housing loan was the least thing the voters hope for. Talk about financial freedom, besides cutting debts on credit-cards, do you know that housing loan is the one actually eating your fortune slowly but surely? Ever heard of paying twice the amount of money for one house? It simply means your house’s interest rate is so venomous that at the end of the payment, you’ve actually paid 2 times the house value when you initially bought it. So you bought the house or condo for RM150,000 and at the end of payment period, you discovered you had paid RM300,000 to own the property. It’s pointless putting the money in the EPF as they pay pathetic annual dividend and since most housing loan is based on daily interest rate, the sooner you settle the loan the better.
Meanwhile, speculations on the street of what could be coming out from the mouth of permier Badawi are the following:
- In a further boost for house buyers, he is likely to announce further reductions for stamp duties. Allowing more withdrawals from EPF accounts for home purchases could be on the card. For existing house owners, talks is in the air that the government will introduce a mechanism allowing EPF contributors to make monthly deductions, the same way as how Singaporeans are doing now. Funny that the government didn’t see this as a good way to improve house-ownership after decades Singapore implemented it. But then maybe the money is better on EPF’s (or government?) pocket than on contributor’s pocket.
- Unlikely sin taxes would be imposed again since the government had recently raised excise duties – Smokers and drinkers to benefits.
- Goods and services tax (GST) to be put on hold temporarily due to the timing of the coming election. GST would burden consumers which would be unfriendly with the general election.
- On corporate tax, it is almost certain that Abdullah would announce another 1% cut, from 27% to 26% in tandem with what he proposed earlier.
- Policies to improve households’ disposable income such as reduction in personal income tax, probably from existing 28% to 27% in 2008 and further reduction to 26% in 2009, inline with corporate tax. Rumor said there could be a cut in employees’ contribution to the Employees Provident Fund (EPF) of up to 2%, which will release RM2 billion in disposable incomes per year.
- Government might consider providing higher personal tax relief as well as relief for spouses and childrens. Currently parents are allowed a deduction of RM800 per child, which is pathetically low considering the high cost of education.
- To fight escalating crimes, government was reportedly might adopt London-style camera surveillance system where thousands of cameras are installed to deter criminals. But again, transparency in calling for tenders and efficient execution and implementation are still the grey area.
- Possible announcement of another round of good bonus for civil servants.
Meanwhile the Customs Department will operate two budget hotlines to enable the public to make enquiries on taxes. Both hotlines at 03-8882 2407 and 03-8882 2412 will be open from 3pm to 10pm today and from 8am to 5pm on Saturday. Enquiries can also be made through facsimile at 03-8889 5884 or via e-mail to firstname.lastname@example.org.
According to Aseambankers, REITs, construction companies, property developers and consumer companies are likely to be the key beneficiaries of Budget 2008 – helped by the relaxation of rules, incentives for home buyers and higher household disposable income. Its top pick for REITs are Axis REIT, Quill Capita Trust and Atrium REIT. Top picks for construction firms and property developers include WCT Engineering, Sunway City and Sunrise, and for consumer companies, KFC, AEON, Amway and QL Resources.
Other Articles That May Interest You …
- Pre-Budget 2008 – What’s your wish? Take a Vote
- Budget 2007 with New Tax on Everything – GST
- More Signs General Election is Nearing