Budget 2025: Focus on issues with rising cost of living, taxes, says Sheda advisor

KUCHING (Oct 5): The Budget 2025 should focus on addressing Malaysia’s rising cost of living amid global economic uncertainties and domestic taxation challenges, said Sarawak Housing Estate Developers Association (Sheda) advisor Dato Sim Kiang Chiok.

In a statement yesterday, he said one of the main challenges in the coming year will be the uncertainty surrounding the global economy, driven by ongoing conflicts.

He noted that while the ringgit has strengthened slightly over the past two weeks, it was largely due to the easing of the United States (US) interest rates.

“Ongoing global conflicts such as the war in Ukraine and unrest in the Middle East continue to disrupt supply chains, which will likely maintain pressure on domestic prices,” he said.

Sim also said that the recent announcement of salary increase for civil servants is a positive move.

He added that the pay raise would help stimulate domestic demand and provide some economic relief by boosting spending power, particularly in the lower and middle-income segments.

“In addressing the cost of living, however, several taxation policies deserve reconsideration.

“The introduction of new taxes, such as the proposed Luxury Tax, the Low-Value Goods Tax, and the increase in Sales and Service Tax (SST) from six per cent to eight per cent, may have unintended inflationary consequences,” he said, urging policymakers to carefully review these measures to avoid putting more burden on households.

Sim also emphasised that rationalising fuel subsidies must be done thoughtfully by tightening enforcement to prevent leakages and monitoring petrol dealers for compliance.

This, he added, would prevent unnecessary price hikes while maintaining subsidies for those who need them most.

Regarding small and micro businesses, Sim highlighted challenges associated with the implementation of e-invoicing.

“The current proposed threshold of RM150,000 annual turnover should be increased to at least RM500,000. This would help alleviate the digital invoicing costs for smaller businesses that may not have the resources to comply,” he said.

On the property sector, Sim said that reviving the Home Ownership Campaign (HOC) would benefit the housing market.

“For properties priced up to RM2.5 million, a stamp duty exemption on the sale and loan agreements would ease the burden on homebuyers. Developers should also be required to offer at least a 10 per cent discount on the approved property prices, similar to previous HOC measures.

“The extension of the stamp duty waiver for first-time homebuyers beyond 2025 is another initiative worth considering.

“Further support could be offered through the reinstatement of the RM30,000 deposit incentive for first-home purchases, as well as reductions in housing loan interest rates,” he said.

Sim also suggested lowering Real Property Gains Tax (RPGT) rates, particularly in the first three years of ownership for both personal and corporate-owned properties, as this could help stimulate more activity in the property market, especially in the commercial and office space segments.

He recommended that the government consider reducing import taxes and levies on building materials and equipment to reduce construction costs, benefiting both developers and homebuyers.

Additionally, Sim proposed grants to be made available to Strata Title Management Corporations in assisting them with their running costs.

“These buildings, being gated and guarded, generally require less security and maintenance compared to landed housing estates, where road repairs and landscaping are significant ongoing expenses,” he said.

The tabling of the Budget 2025 in the Dewan Rakyat on Oct 18, 2024 will mark the third by the Unity Government.