Malaysia Home Loan Tips: Budget

Sunday, October 6, 2013

Higher Sin Tax in Budget 2014

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Higher Sin Tax in Budget 2014

As cigarette smokers watched their cash go dissipate in a proverbial puff of smoke; alcohol consumers will also find themselves paying more for their 'vices' once Budget 2014 is implemented. Two days ago, the price of cigarettes shot up to what some termed an 'excessive' 14% and analysts are now predicting a 10% increase in tax on breweries.

We anticipate 10% or a 74-sen increase in the excise duties for the brewery sector, and Government coffers may grow by RM145mil per annum.
“As for tobacco, a three-sen increase would probably generate a cumulative RM435mil in Government revenue. Meanwhile, the price increase of alcoholic beverages and tobacco would not have a significant impact on inflation, as this segment contributes a mere 2.2% to the basket of items making up the Consumer Price Index, said AmResearch analyst Patricia Ohin a pre-Budget 2014 report yesterday.

Of course, it's unlikely that the increase will cause many to give up the habits but many do predict that this will instead drive the illegal smuggling of cigarettes.

Cigarette and alcohol tax has for many years been known in the country as 'sin tax' and almost every year, the prices of cigarettes and alcohol have steadily increased.In Budget 2013, prices raised RM0.20 per box but smokers were spared increases in 2012 after a hefty increase of RM0.70-RM0.80 in 2011.*

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BR1M disbursements changing in the coming Budget 2014

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BR1M disbursements changing in the coming Budget 2014

The Finance Minister II told reporters the 1 Malaysia people's aid (BR1M) will see an increase upon the announcement of Budget 2014. Not only that, there will be a new mode of disbursement.

"BR1M's distribution method will be changed into being disbursed twice a year instead of once come 2014 and the government plans to deposit the money straight into the recipient's bank account." said Finance Minister II Datuk Seri Ahmad Husni Hanadzlah.

It will of course be less of a hassle for recipients to collect their BR1M as the distribution method now is done through cash vouchers.

Lastly, Ahmad Husni stated that the government will plan to look at a model to aid those earning a household income of RM4,000 to RM5,000 but made no indications as to what these might be. Considering the recent petrol price hikes, and the almost inevitable introduction of GST, there is no doubt that even middle income earners with household levels of RM5000 will need some help to manage their rapidly disappearing money.

*Picture courtesy from Newsabnxcess.com