Salient points in 2008 Budget

The following are the salient points in Prime Minister Abdullah Ahmad Badawi 's 44-page Budget speech entitled 'Together Building the Nation and Sharing Prosperity' delivered in Parliament this afternoon.This year’s Budget is Abdullah’s fourth since he took over as prime minister from Dr Mahathir Mohamad in October 2003 and subsequently won a landslide victory in the general election a few months later. Corporate tax slashed to 25% Corporate tax will be reduced to 25% in 2009. The government announced the first cut in corporate tax in nine years in last year’s budget, reducing the company tax rate to 27 percent this year and 26 percent in 2008, from 28 percent previously.Reduce government red tape
Reduce the period for refund of income tax from six months to between 14-30 days for e-filing applications.
Immediate registration of companies instead of three days previously.
Reduce the approval time for Environmental Impact Assessment from three months to five weeks.
Cutting the processing period for work permit to seven days for skill workers, compared to 14 previously.
Multiple entry visasIndian and Chinese nationals can apply for multiple entry visas in the country where they are residing or working, instead in their country of origin.
This facility will be made available in international financial centres, such as New York, London, Hong Kong and Singapore, effective January 2008.50% stamp duty exemption for housesA 50% stamp duty exemption on documents of transfer will be given for the purchase of one house of not more than RM250,000 per unit. This will rduce the cost of buying a house by up to RM2,000.
An initial fund of RM400 million has been earmarked to increase bumiputera property investment in Iskandar Development Region in Johor.More flexibility for SMEsSmall and Medium-side Enterprises (SMEs) will have the flexibility to pay taxes at the end of financial year instead of monthly instalments. Education fees abolishedThe annual fees for primary and secondary schools will be abolished, effective 2008.The Text Book Loan Scheme will be provided to all students, irrespective of their families' income and with no restrictions on the number of eligible children. With this, schooling in Malaysia is now completely free.Free uniform for uniform activities for those students from families with monthly income of RM1,000 and below.Increase allowance for teachers
Increase the allowance for special education teachers from RM100 to RM250 per month.
Raise the allowance for graduate substitute teachers from RM85 to RM150 per month.
Provide an allowance of RM60 per hour for degree holders and RM50 per hour for diploma holders teaching Chinese and Tamil languages in national schools.
More scholarships for higher educationThe number of undergraduate students sponsored by Public Service Department in local universities from 5,000 students to 10,000 annually, beginning 2008.The cost of living allowance (Cola) for government-sponsored students in local higher education institutions will be increased between 23% and 84%.The Cola for government-sponsored overseas students in US, UK and Canada will be increased by up to 97%, almost double the current rate.Tax relief for post-graduate students and sports equipmentTax relief of up to RM5,000 on education fees be extended to all post-graduate students.The law will be amended to allow employers to provide financial assistance to enable workers to pursue post-graduate degrees, especially in new and high technology areas.Individual tax relief of up to RM300 a year be given to the purchases of sports and exercise equipment.Encouraging ICTLast mile network facilities providers be given Investment Allowance of 100% on capital expenditure incurred for broadband up to Dec 31, 2010.Import duty and sales tax exemptions be given on broadband equipment and consumer access devices.Tax deduction for employers on benefits in the form of new computers and broadband subscription fees for employees. Such benefits received by employees will also be tax exempted. Malaysian Communications and Multimedia Commission has allocated RM45 million for the implementation implementation of SchoolNet project to provide Internet services to schools.
Monthly withdrawals for EPF contributorsEPF contributors can make monthly withdrawals from the balance in Account 2 (30% of total contributions). This will be effective from Jan 1, 2008 and for the financing of one house.This is for those who have to pay off their housing loan.
Stamp duty exemption for husband-wife property transferFull stamp duty exemption on the transfer of property from husband to wife.In cases where the wife wishes to transfer property to the husband, the same exemption applies.
More spending in public transportation
Over the next four years, RM12 billion will be spent to improve public transportation in Kuala Lumpur and Penang.To alleviate traffic congestion in Penang, the Penang Outer Ring Road (Porr) will be implemented on a tender basis shortly.RM2 bil bond for senior citizensA RM2 billion bond will be issued by Bank Negara Malaysia to be subscribed by senior citizens aged 55 years and above, who do not have permanent jobs.The maximum limit per person is RM50,000, with a maturity period of three years and a rate of return of 5% per year.To reduce the financial burden of the poor and needy senior citizens, the Government will increase their allowance from RM200 to RM300 per month, effective from Jan 1, 2008.Higher allowance for the disabled The disabled workers monthly allowance to increase from RM200 to RM300.A special assistance of RM300 per month for eligible persons taking care of the disabled, who are bed-ridden and patients suffering from chronic illness. Tax deduction on renovation costs in the work place incurred by employers for the disabled to encourage the private sector to hire more disabled workers.Budget deficit down to 3.1% The government has said that it will reduce its fiscal deficit in 2008 to 3.1% of gross domestic product from 3.2% in 2007. While it was estimated that the deficit is around 3.4% this year, it appeared to have been revised to 3.2% due to unexpected high income from oil exports and an increase in tax revenues.The budget deficit, the 11th in a row, has seen a progressive reduction since 2000 which stood at 5.5% then. The government has not set a deadline in its effort to wipe out the budget deficit, which as a share of GDP is the biggest in Southeast Asia. The budget deficit is due to the government spending more than it earned over the years. Economic growth between 6% and 6.5% in 2008The goverment is bullish on economic growth for next year - expected to be between 6% to 6.5%.Growth was 5.9% in 2006. It slowed to about 5.8% currently, but the government is maintaining its forecast for this year at 6%.Total expenditure for 2008 BudgetThe total expenditure for 2008 Budget is RM176.9 billion - 10.9% higher than the spending in 2007.Of this, RM128.8 billion is for operating expenditure while RM48.1 billion is for development expenditure.The development expenditure was RM46 billion in last year’s Budget.What's not in 2008 BudgetNo cut in income tax - The income tax will remain at 28% while corporate tax will be slashed to 25% in 2009. There is also raise in the minimum taxable income level and the provision of higher tax relief for spouses, children and insurance payments.No increase in sin tax - the government has already increased the excise duty on tobacco products by 25% two months ago. There is also no hike in alcohol duties.No implementation of GST - the long-delayed goods and services tax will be put off to 2009. The GST was announced in 2005 and was to be implemented in January 2007. No bonus for civil servants - Unlike last year, the 2008 Budget did not mention any bonus for civil servants this year.