PETALING JAYA: A think tank has questioned the apparent lack of strategy in the 2023 budget tabled today on how the government will deal with its high operational expenditures.
There were too many ad hoc goodies announced in the budget, said Carmelo Ferlito, CEO of the Centre for Market Education.
Initiatives announced in the budget should have been accompanied by rationalisation of operational expenditure, and better enforcement of tax collection, to avoid compromising the government’s fiscal position and adding to inflationary pressures, he said.
“Operational expenditures such as civil servants’ salaries and subsidies are still very high. If we do not improve revenue collection and cut spending, debt and inflation will become more serious problems in light of tax cuts,” he said.
Civil service emoluments take up RM90.6 billion (33.3%) of the total of RM272.3 billion allocated for operating expenditure.
However, Ferlito welcomed the tax cuts, grants and loans announced for small and medium-sized enterprises. These are necessary, he said. Another positive budget measure was investment in technical and vocational education and training.
The 2023 budget includes a 2% reduction in personal income tax, which will benefit over 1 million middle-income earners. Small businesses would also enjoy a 2% cut in income tax.
More than RM1 billion in grants were also allocated for micro, small and medium-sized enterprises.
Ferlito said the government should relook at its role as an “employer and mega-projects developer”, and see how it can play a more facilitative role with the goal of reducing its operational expenditure.