(Bernama) – The government has reduced the income tax as promised, says Second Finance Minister Datuk Seri Johari Abdul Ghani.
Johari said when the government introduced the goods and services tax (GST) in 2015, it had promised the people to reduce the income tax.
“We have lower the corporate tax from 26 per cent to the current 24 per cent. While for last year, we also reduced the small and medium enterprise tax from 19 per cent to 18 per cent.
“Now, we are reducing the tax rate individually as we promised,” he told Bernama after the tabling of 2018 Budget by Prime Minister Datuk Seri Najib Tun Razak at Dewan Rakyat here today.
Najib announced that the tax rate for middle-income residents with taxable income of between RM20,000 and RM70,000 would be lowered by two percentage points.
Johari said while the government expected the revenue would be reduced, the initiative would generate an additional disposable income of RM1.5 billion spent by the people.
“The extra money that the people have would be contributing back to the economy via consumption.
“At the end of the day, it will benefit the businesses, economy and the government ultimately because when the businesses make money, they will pay the tax back to the government,” he said.
Meanwhile, he said, the 2018 Budget was a comprehensive, inclusive and progressive one that would help realise Malaysia’s high-income nation target by 2020, he said.
Johari said a slew of initiatives — digitalisation for businesses or tax cuts for individuals — were included in the budget.
“The digitalisation measures showed that the government has taken a step forward to remain competitive in the future,” said.
He said currently, economy digital accounted for about 18 per cent of the gross domestic product with RM1.2 trillion.
“If we do not step forward and emphasis on digital infrastructure, digital transaction, digital economy and e- government, we may left behind in the future,” he said.
On the emphasis on automation and Industry 4.0, Johari said, the initiatives encouraged the local small and medium enterprises to focus on automation.
“This will reduce the reliance on the foreign workers,” he said.