PM Anwar’s Robin Hood budget is populist but no game-changer for Malaysia’s economy

PM Anwar’s Robin Hood budget is populist but no game-changer for Malaysia’s economy

KUALA LUMPUR — A story is circulating that Malaysian Prime Minister Anwar Ibrahim avoids wearing a tie because he adheres to the idea that it is a symbol of subjugation to the wealthy aristocratic class.

The story is probably apocryphal, but it is consistent with the message so far from his three-month-old government. The revised version 2023 budget he tabled on Friday further reinforced this position, containing measures to tax and redistribute the wealth of the “super-rich”.

Datuk Seri Anwar, who is also finance minister, announced an income tax cut for middle-income earners that would provide additional disposable income of up to RM1,300 (S$396) each for 2.4 million of taxpayers.

But the rate of tax has been increased for another 150,000 people – around 1% of the working population – who earn taxable income in excess of around RM20,000 per month.

The budget proposed taxes on luxury goods, a capital gains tax on unlisted shares from 2024 and a tax on e-cigarettes and vapes, which would be funneled into the stretched public health service. . Mr Anwar also announced measures to help replenish the savings of the poor in state-controlled pension and investment funds that have been drawn down during the Covid-19 pandemic.

This is on top of maintaining RM8 billion in cash assistance to the poorest 60% of society, as well as RM64 billion in grants that could be more targeted to ensure they benefit the poor more than they do. to the rich.

According to Awang Azman Awang Pawi, professor of sociopolitics at the Universiti Malaya Center for Democracy and Elections, “the prime minister has sought to be seen as pro-lower and middle class since he first became involved in the ‘activism and politics’.

Professor Awang Azman also noted Mr Anwar’s reference during his budget speech to the Pandora Papers, which in 2021 leaked details of secret offshore accounts, and the government’s plan to crack down on wealthy tax evaders .

“The sum to be returned to the public could fund projects and national coffers without taxing the poor,” added the professor.

Some observers remembered the English legend of Robin Hood, an outlaw who robbed – and despised – the rich to give to the poor.

This image is reinforced by Mr Anwar’s earlier popular decisions such as canceling the purchase of a RM2.3m Mercedes-Benz for his use, not taking a ministerial salary while the rest of his cabinet took a 20% pay cut and forcing tycoon Syed Mokhtar Albukhary to share profits from his rice monopoly with farmers.

“The budget was in line with his Madani concept of a human civilization,” the chief strategy officer of risk consultancy KRA Group, Mr Amir Fareed Rahim, told the Straits Times.

“Social justice will be the main narrative axis, where Anwar will target the better-off to convince the general public that his government will ensure that the pain is shared.”

But like other analysts, he noted that while the prime minister attacked corruption and the concentration of wealth among an ultra-wealthy elite, fiscal and economic measures as a whole were “safe and populist, with no real game-changer despite the earlier hype about elevating the economy to the next level”.

“The budget leans towards populism, with a large share of grants and welfare while increasing tax collections from wealthier segments. The government has stated that the country does not currently apply a consumption tax or a broad-based goods and services tax, taking into account the cost of living,” the economics team said. UOB.

Rising prices have affected everyone, and with inflation expected to continue high – in the 2022 range of 3.3% instead of the decade average below 2% – the measures against rich will please the poor but will hardly result in a belt. tightening for the wealthiest.

According to calculations by the Ministry of Finance, someone with a taxable income of RM250,000 a year – which would already place a single-earner household in the top 4% of Malaysian families – will end up paying just RM200 of more in government.

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