EPF WIthdrawal, E-Wallet Credit, Vape Tax & Other Highlights
This year’s budget was not so much about the winners as it was about the losers, but the finance minister still picked up on a few surprises.
Everyone expected the fight to contain the pandemic and win the war on COVID-19 to be the main focus of the budget and the minister did not disappoint.
Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz announced that while Malaysia’s law on Temporary Measures to Reduce the Impact of Coronavirus Disease 2019 (Covid-19) 2020 already allows the government to allocate 45 billion from RM to the COVID-19 fund, this is not enough. The government is to ask for an additional RM20 billion to tackle the pandemic in this budget proposal.
He also pointed out that the government plans to spend around RM3 billion on the COVID-19 vaccine when it becomes available.
Education gets the biggest share
Education is one of the biggest winners. A total of RM 50.4 billion will be spent by the government on schools, higher education and technical and vocational education and training (TVET).
Along with the funds needed to modernize and repair schools, this year’s budget also included initiatives to provide laptops to low-income and disadvantaged students.
TVET programs have received a whopping RM6 billion with various initiatives aimed at empowering young people to get the training they need to find employment. Other parts of education like sports, vocational courses, internship opportunities have also received funding along with a transportation pass aimed at helping all students get the education they need for a better future.
Meanwhile, the eBelia program will provide a one-time credit of RM50 to e-wallet accounts for young people between the ages of 18 and 20.
Unemployment and financial aid
The COVID-19 pandemic has really thrown a wrench in the economy. We are seeing the largest increase in the unemployment rate to 5% in April, the highest in 30 years. One of the biggest concerns of Malaysians is the higher unemployment rate as well as the financial hardship they are going through due to loss of income.
The government recognizes this concern and Tengku Zafrul has proposed a number of initiatives to tackle the unemployment problem as well as the introduction of Bantuan Prihatin Rakyat (BPR) to replace Bantuan Sara Hidup (BSH).
(21 years and over)
|Less than RM2,500|
|2,501 RM – 4,000 RM|
|RM4,001 – RM5,000|
The 2021 budget also set aside RM3.7 billion to create 500,000 jobs for Malaysians through initiatives such as PenjanaKerjaya, requalification and skills upgrading programs, short-term employment program ( MySTEP), a targeted wage subsidy program and social protection efforts.
Vape tax, income tax reduction and withdrawals from EPF 1 account
There was much discussion before the budget was tabled as to whether the government would introduce new taxes, but the general opinion was that the time was not right given the economic downturn.
However, the government managed to come up with a new tax – a tax on electronic cigarettes and vaping. The tax, which will come into force from January next year, will impose an excise tax at the rate of 10% on all types of electronic cigarette devices, including vape, with their liquid cartridges also subject to the tax.
The biggest loser of this budget is probably smokers, as there are many restrictions in place on the importation of cigarettes, as well as making it taxable in all duty-free islands and in all free zones that have been allowed. for retail sale of cigarettes.
Although the government needs more revenue next year, it has continued to enjoy some tax benefits, especially for lower incomes. There is a 1% reduction in income tax for those earning between 50,000 and 70,000 RM with an increased tax exemption for those who lose their jobs, as well as a range of tax breaks on the education savings, medical treatments, vaccinations and health examinations.
Another announcement that aroused strong reactions from all was the proposal to authorize withdrawals from account 1 of the Employee Provident Fund (FPE). This allows members who have lost their jobs to withdraw RM500 per month, up to RM6,000 for one year. At the same time, the government has also proposed to reduce membership fees to 9% from January 2021.
In the meantime, there has been no extension of the moratorium on loans, although many groups have called for this initiative. Instead, there will be an improvement in targeted repayment assistance for people in the lower income group of 40 (B40) and small and medium enterprises (SMEs).
In total, the budget stands at RM322.5 billion, which covers many areas of usual spending on defense, health and housing, but this year the focus is more on social protection, sustainable development and investments for the future.
The Minister of Finance ended his speech by calling on everyone to unite for the well-being of all Malaysians.
“We have to be thankful; we are still strong in all of this ”, concluded Tengku Zafrul, calling for“ making this budget the gun of our unity for the well-being of the people ”.
For more information on what the 2021 budget offers, visit imoney.my
Our sincere thanks to