Prime Minister Datuk Seri Anwar Ibrahim has tabled Budget 2025, marking his third federal spending plan since taking office. The budget, amounting to RM421 billion, is the largest in Malaysia’s history, with RM335 billion allocated for operating expenditure and RM86 billion for development expenditure, excluding RM2 billion in contingency savings.

Here are the key policies and initiatives announced in Budget 2025:

1. Sales tax changes

- No Sales Tax on Basic Food Items: From May 1, 2025, the expanded SST will take effect, exempting basic food items from sales tax. However, premium imported goods like salmon and avocado will remain taxable.

- Service Tax Expansion: Service tax will now include more commercial services, such as fee-based financial services.

2. Targeted RON95 petrol subsidies

- Beginning mid-2025, targeted subsidies for RON95 petrol will be implemented, maintaining subsidies for 85% of the population. This aims to address the growing subsidy cost, which reached RM20 billion in 2023.

3. 2% dividend tax

- Starting from the 2025 assessment year, a 2% tax will be imposed on dividend income exceeding RM100,000 for individual shareholders, expanding the government’s tax base.

4. Increased grants for Sabah and Sarawak

- The special grants for Sabah and Sarawak will be doubled to RM600 million next year, marking the first increase since 1969.

5. Subsidy reform in eealthcare and Education

- The government will retarget subsidies for boarding schools and healthcare, reducing financial assistance for the top 15% of income earners. High-income groups will be required to contribute more towards public healthcare services.

6. Flood assistance

- An additional RM150 million has been allocated to the National Disaster Management Agency (Nadma) and local authorities for flood preparedness, particularly following recent flooding incidents in Kuala Lumpur.

7. Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara)

- The government will increase allocations for STR and Sara to RM13 billion, benefiting 9 million recipients, or 60% of the adult population.

8. Minimum wage increase

- The minimum wage will rise from RM1,500 to RM1,700 per month starting February 1, 2025, with a six-month deferment for businesses with fewer than five employees.

9. Support for first-time home buyers

- First-time home buyers will receive tax relief of up to RM7,000 on loan interest payments for homes valued up to RM500,000, and RM5,000 for homes valued between RM500,001 and RM750,000, for three consecutive assessment years.

10. Cheaper student travel

- Prasarana will introduce van services for students at *50 sen per trip* from selected train stations. Additionally, students from universities, polytechnics, and community colleges will enjoy free rides on the BAS.My stage bus service nationwide.

11. Sugary drink tax

- Starting January 1, 2025, the excise duty on sugary drinks will increase by 40 cents per litre, with proceeds funding diabetes treatment and dialysis for kidney patients.

12. Public service enhancements

- JPJ operating hours will be extended by one hour, and a new Urban Transformation Centre (UTC) will be established in Seberang Perai. The MADANI Touch Kiosk will provide convenient, cashless government services, with iPayment solutions allowing payments via e-wallets, debit/credit cards, and digital platforms.

13. Special assistance for civil servants and pensioners

- A special RM500 assistance will be given to civil servants Grade 56 and below, with RM250 allocated to pensioners. This assistance will be paid out in February 2025.

14. Support for autistic children

- The government will provide a monthly allowance of RM150 for over 110,000 students with disabilities, and two new schools for special needs students will be built in Tuaran, Sabah, and Johor Bahru.

15. Rahmah cash aid for single individuals and households

- Single individuals will receive RM600 under the Rahmah Cash Aid (STR), while households will get up to RM4,600, an increase from the current RM3,700. Additionally, Sara assistance will be extended to households next year.

16. Mandatory EPF contributions for non-citizens

- The government will make EPF contributions mandatory for non-citizen workers, ensuring greater inclusivity in retirement savings.

Budget 2025 sets the stage for economic reform, aiming to create a more inclusive and sustainable future for all Malaysians.

Source / Image Credit : Awani, Sinar Harian, Bernama