ANNUAL national budgets are not supposed to introduce drastic economic measures. It is supposed to fine tune the economic and tax policies that are already in place to drive the economy.
In following the convention, Prime Minister Datuk Seri Najib Tun Razak unveiled a no-surprise budget to steer the economy next year.
Unlike previous budgets, the plan this year did not feature any big ticket construction projects. Nor were there announcements of major tax measures or new public policy initiatives.
However, Budget 2018 did address most issues that ordinary folks faced. It maintained measures to assist the bottom 40% of the population and tackled head-on the issues faced by the middle income.
However, the Government was not prepared to loosen its overdrive to consolidate the spending, a policy that has been in place for the last four years. For the first time in many years, the Federal Government is expecting its deficit to be less than 3%.
This is part of its initiatives to have a near-balanced budget by 2020. In the world of public finance, countries that have a balanced budget – meaning they spend only what they earn – are considered a class above the rest.
Apart from BR1M, there were various programmes to help the B-40.
As for the middle class, Budget 2018 addressed two key issues that households faced – the rising cost of living and not being able to find an affordable roof over the head.
The proposed 2% cut in individual income tax will put more money in the hands of the middle and upper class segments of the population. Although in the budget it stated that it benefits those earning less than RM9,000, in reality it also helps those earning higher.
As for housing, on the face of it, there do not seem to be any major moves such as reduction in real property gains tax (RPGT) or exemption for stamp duty on purchases. For a government that is tightening its purse strings, it is only right not to disturb the status quo with regards to the RPGT and stamp duty.
However, it announced measures to facilitate easier financing for those wanting to purchase properties below RM450,000. For instance, the two-step financing plan that was only made available for those purchasing the PR1MA houses are now extended to private developers.
For civil servants, they can take a joint loan with the husband or wife who works in the private sector. This will allow thousands of civil servants to own houses that fetch a higher value.
After Budget 2018 was announced, many were looking for major new developments. There was nothing really new.
However, Budget 2018 addressed contemporary issues that stubbornly bogged down the lower and middle income groups of people without wavering on the Government’s financial discipline to keep a lid on expenses.