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FORMER finance minister and Bagan MP Lim Guan Eng is preparing to formally advise Prime Minister Datuk Seri Anwar Ibrahim on measures aimed at stimulating Malaysia’s economy, including a carefully staged increase in personal income tax relief.
Lim emphasised that while the national unity government needs to maintain fiscal revenue, gradual adjustments to tax relief could provide much-needed support for households without compromising government finances.
Lim highlighted that the current personal income tax relief threshold of RM9,000 has remained unchanged for 15 years, despite inflation and a significant rise in the cost of living.
He argued that the threshold should be raised to RM12,000, but in a phased manner to prevent fiscal strain and ease taxpayers into the adjustment.
“At present, the annual tax relief when we file our tax returns is RM9,000, but this figure has remained unchanged for 15 years.
“When we consider inflation and the cost of living, both have increased compared with 15 years ago. RM9,000 should be raised to RM12,200, but we propose rounding it to RM12,000. I will write to the prime minister next week regarding this proposal,” Lim said in a social media post.
He outlined a gradual approach, suggesting an initial increase of RM1,000 this year, followed by annual increments of RM1,000 until the threshold reaches RM12,000 by 2028.
Lim stressed that a sudden increase of RM3,000 in one year could adversely affect government finances.
“However, if we were to increase it by RM3,000 all at once, it could cause difficulties or affect the government’s fiscal and financial position. That is why we propose a phased approach, starting this year with an increase of RM1,000. We would then raise it by RM1,000 each year. If it increases by RM1,000 this year, it will reach RM12,000 by 2028,” he explained.
Lim said the phased increase would provide households with higher disposable income gradually, helping to drive domestic spending and bolster economic activity.
He also reiterated previous recommendations, including faster reimbursement of excess income taxes and targeted financial assistance to support consumer expenditure.
Observers note that measures to ease cost-of-living pressures may help restore public confidence in the Pakatan Harapan-led government, particularly after economic concerns contributed to diminished voter support during the recent Sabah state election. - January 3, 2025