PETALING JAYA: Goods and Services Tax (GST) relief, tax breaks for spouses, parents and caregivers, education development, healthcare and infrastructure development, and infrastructure development initiatives for Sabah and Sarawak – these are the highlights of Prime Minister Datuk Seri Najib Tun Razak’s Budget 2016.
Najib, who presented his budget speech before the Dewan Rakyat Friday afternoon, first shook Parliament when he announced that certain items would be GST-free from Jan 1 2016.
“Firstly, controlled medicines under the Poisons List Group A, S, C and D as well as an addition of 95 brands of over-the-counter medicines including treatment for 30 types of illnesses such as cancer, diabetes, hypertension and heart disease. This is a double increase from 4,215 to 8,630 brands of medicines will be GST zero-rated,” said Najib.
He added that soybean-based milk and organic-based milk for infants and children, dhal, chickpeas, green and white beans, lotus roots and water chestnuts, mustard seeds, jaggery powder and dried mee kolok would also be zero-rated.
“Companies involved in maintenance, repair and overhaul (MRO) activities in the aerospace industry are allowed to participate in the Approved Trader Scheme which relieves them from paying GST on the imported goods. For the oil and gas industry, GST relief is provided on the re-importation of equipment such as equipment for oil and floating platforms that are temporarily exported for the purpose of rental and leasing,” added Najib.
He said that GST relief would also be provided for the re-importation of goods that were exported temporarily for the purpose of promotion, research or exhibitions.
Najib added that GST relief was also provided on teaching materials and equipment procured by skills and vocational training providers conducting approved programmes under the National Skills Development Act 2006.
“The Government realises that the majority of mobile phone users, particularly youths, depend on prepaid telecommunication services or prepaid cards. In this regard, Malaysian consumers will receive rebates equivalent to the amount of GST paid, which will be credited directly to their prepaid accounts. This measure will be effective from Jan 1 to Dec 31, 2016,” said Najib.
He also unveiled tax increases for high-income earners.
In an effort to strengthen the tax structure to be more competitive and progressive, he proposed that the taxable income band for the highest tax rate be increased from 25% to 26% for those with an income between RM600,000 and RM1mil. For those with an income above RM1mil, the tax rate will be increased from 25% to 28%,” said Najib.
However, Najib also announced certain tax breaks.
“The tax relief for each child below 18 years of age is increased from RM1,000 to RM2,000 from year of assessment 2016. The tax relief for the individual taxpayer whose spouse has no income is increased from RM3,000 to RM4,000. Currently, individual taxpayers are given tax relief up to RM5,000 per year for medical treatment and care of parents who are ill. The Government views positively the attitude of children who take care of the welfare of their parents and encourages strengthening of the family institution,” said Najib.
He added that tax relief would be given for children who provide for their parents.
“For the first time, tax relief for children who provide for their parents is RM1,500 for the mother and RM1,500 for the father. The relief is subject to the condition that each parent does not have income exceeding RM2,000 a month and must be 60 years and above,” said Najib.
He added that there would be increases in tax relief for parents of children above the age of 18 who are studying in institutions of higher education.
“The tax relief will be increased from RM6,000 to RM8,000 for each child above the age of 18 years who is studying at local or foreign institution of higher learning, from year of assessment 2016. The tax relief will be increased from RM6,000 to RM8,000 for a disabled child above the age of 18 years who is studying at local or foreign institutions of higher learning, from year of assessment 2016,” said Najib.
He added that the existing relief for parents of a child with a disability is RM 6,000.
“This means that if the disabled child continues his or her education in local or foreign institutions, the total relief allowable is RM14,000,” said Najib.
He also unveiled several housing initiatives for 2016.
“The 2016 Budget will continue with various house ownership programmes for all levels of income as follows. People’s Housing (PR1MA) is to build 175,000 houses which will be sold at 20% below market prices, with an allocation of RM1.6bil. A total of 10,000 units are expected to be completed next year. Syarikat Perumahan Negara Bhd will build 10,000 units of Rumah Mesra Rakyat with a subsidy of RM20,000 for each house through an allocation of RM200mil,” said Najib.
He added that 22,300 units of apartments and 9,800 units of terrace houses will be built under the People’s Housing Programme (PPR) with an allocation of RM863mil to the Urban Wellbeing, Housing and Local Government Ministry.
Najib added that several healthcare initiatives were also in the pipeline for 2016, such as the building of five new hospitals in Pasir Gudang, Kemaman, Pendang, Maran and Cyberjaya and the redevelopment of Kajang Hospital.
“The RM848mil Kuala Lumpur Women and Children’s Hospital will commence operations in October 2016.
He proposed that RM250mil be provided to build and upgrade rural clinics, health clinics, dental clinics as well as quarters nationwide; RM52mil for operating the existing 328 1Malaysia clinics and establishing 33 new ones; and RM72mil to provide medical assistance, including haemodialysis, which is expected to benefit nearly 10,000 poor patients.
He added that RM4.6bil will be allocated for the supply of medicines, consumables, vaccines and reagents to all government hospitals and clinics and that from Jan 1, 2016 the Government will impose full medical charges on non-citizens.
Najib also unveiled several education initiatives for 2016, leading off by saying that the Government will be building 30 new primary schools and 27 new secondary schools nationwide.
“Four MARA Junior Science Colleges (MRSM) will be built in Sik, Kedah, Ketereh and Tanah Merah, Kelantan and Bagan Datoh, Perak; and five fully residential schools will be built in Alor Gajah, Melaka; Pendang, Kedah; Segamat and Ledang, Johor; and Jerantut, Pahang,” said Najib.
Najib added that RM44.6mil will be allocated to implement various programmes in 9,113 pre-school classes in schools nationwide and RM135mil will be allocated for upholding Bahasa Malaysia and strengthening English Language proficiency.
“Given the importance of the English Language to face current global competition, another two initiatives, namely the Dual Language Programme and Highly Immersive Programme, will be implemented as an option at a cost RM38.5mil. In this respect, 300 schools have been identified as a pilot project,” he said.
Najib added that the RM100 schooling assistance would be continued.
“From January 2016, it will be targeted to students from households with monthly income of RM3,000 and below. This will benefit 3.5 million students through an allocation of RM350mil. The supplementary food programme involving 550,000 students from poor families listed in e-Kasih will be enhanced. Previously, the programme only provided meals during recess, but it will now be expanded to provide breakfast with an additional cost of RM173mil. The overall cost for the programme is RM423mil,” said Najib.
Najib also announced several initiatives for Sabah and Sarawak, with the 1,090km Pan-Borneo Highway coming first on his list.
“It is expected to be completed in 2021 with an estimated cost of RM16.1bil. In Sabah, construction work on the 706km highway from Sindumin to Tawau will commence in 2016 with an estimated cost of RM12.8bill. I am pleased to announce that the Pan-Borneo Highway will be toll-free,” said Najib.
He added that the domestic air transportation for economy class passengers on Rural Air Services (RAS) routes is exempted from GST.
“As a new programme, RM70mil is provided through Bank Simpanan Nasional in collaboration with the state government of Sabah and Sarawak for interest free loans for the purpose of building longhouses with a maximum loan up to RM50,000 for every unit in the longhouse,” said Najib.
Source: The Star Online