Putrajaya not being ‘Robin Hood’ with Budget 2016, says finance sec-gen

Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah today defended Budget 2016 from claims that it was a "Robin Hood" budget that taxed the rich to help the masses. Prime Minister Datuk Seri Najib Razak proposed when tabling the budget yesterday to increase the income tax rate for those earning more than RM600,000. "It (Budget 2016) is not a Robin Hood budget. The amount that we will be collecting (from the income tax) is around RM400 million plus. We are not taxing billions (or ringgit). "So it is a modest kind of thing," Irwan told reporters after the 2016 Post-Budget Dialogue organised by the Malaysian Economic Association at Pullman Bangsar today. The budget proposed that those earning between RM600,000 would be taxed 26%, from the current 25%. Those whose incomes exceed RM1 million will see their tax rate surge to 28%. Justifying the increase, Irwan said the income tax bracket in Malaysia was still lower than other countries, where tax rates range from 40% to 60%. "We are not charging that much, you know. It (the income tax) is about 28%. So, I don't consider it (as Robin Hood budget). "There are a lot of things given to the rich, especially in terms of funds that we have put in such as the small-medium enterprise fund and IBS (intelligent building system) fund and so on," he said. Irwan said if world oil prices climbed back to US$100 a barrel, Putrajaya would consider reducing the income tax bracket. "We are thinking to reduce even the income tax bracket for middle and higher income earners. But because of the (volatile crude oil price) situation, we have no choice but we need to go for a 3.1% budget deficit target by implementing some prudent measures," he added. This year, Putrajaya expects to trim its budget deficit to 3.2% from 3.5% in 2015. Budget 2016 was prepared on the Brent crude oil price of US$48 a barrel, while last year's budget was formulated at Brent assumption of US$100 a barrel. The Brent crude oil price has fallen by some 50% from its highest level of US$115 a barrel on June 19, 2014. Currently, it is trading between US$40 a barrel and US$50 a barrel. Given volatile crude oil prices, analysts expect oil revenue contribution to the government's coffers to drop from 29.7% in 2014 to 19.7% in 2015 and 14.1% in 2016. – October 24, 2015.]]>