KUALA LUMPUR: The 2025 Budget will be a blend of sustaining economic growth with fiscal stability, investment orientation and supporting long-term sustainable development, according to Socio Economic Research Centre.

SERC executive director Lee Heng Guie said the budget should focus on six key issues, namely gradualism of fiscal reforms, introduction of Global Minimum Tax, tackling cost of living, managing business costs, skills development and greening investment.

"We expect the government to aim a lower fiscal deficit to gross domestic product (GDP) ratio of 3.8 per cent for 2025 from estimated 4.3 per cent in 2024 on better federal revenue outturn and continued restraint in operating expenditure," he said in a media briefing on Malaysia's quarterly economic tracker here today.

On tackling cost of living pressure, Lee said despite the economy is expanding faster than expected, the trickle-down effects and spread of benefits would take time to be enjoyed by the people.

He noted that while headline inflation has been stable since the second half od 2022, households' cost of living pressures still biting.

He added that real wage growth per employee has been negative for many quarters, eroding purchasing power and placing financial strain on households.

Another issue arise is medical inflation as healthcare costs increased every year, with a record 12.6 per cent in 2023 while medical insurance premiums are hitting the low- and middle income households.

"Medical inflation is a big concern now at about 4.6 per cent to-date while historically grew by 10 per cent every year. Insurance premium also increased every year," he said.

Lee also suggested that tax relief for B40 and M40 households should be increased to RM12,000 from current RM9,000 which was last revised in 2010, while reintroducing the parental care tax relief that was last given in 2020.

He expects the government to announce its continued commitment in training and skills development as well as technical and vocational education and training (TVET) in collaboration with the government-linked companies, industry, associations and established public and private training institutions.

"Giving money to people is not sustainable in long-term hence you need to upskill people to improve their earning power while continue supporting those in needs such as those who cannot work and very poor," he said.

As for business costs, Lee said the government should increase the annual earning threshold to RM500,000 from current RM150,000 for small and medium enterprises enjoying preferential tax of 15 per cent.

He also said the government should consider making participation in e-invoicing voluntary for businesses with an annual turnover or revenue below RM500,000 from RM150,000 currently.

He added that the full implementation of e-invoicing should be delayed to Jan 1, 2027 instead of initial date of July 1 next year.

https://www.nst.com.my/business/economy/2024/10/1116723/budget-mix-sustainable-growth-and-fiscal-stability