Budget 2010, scheduled to be unveiled on Oct 23 in Parliament, is likely to be smaller, Second Finance Minister Ahmad Husni Hanadzlah said today.

najib and budget"It'll be smaller but let's wait for the announcement by Prime Minister Najib Tun Razak during the budget presentation. Then, we'll know the quantum," he said.

He said the government was seriously looking at reducing operational expenditure for next year.

On development expenses, he said: "This budget will be the last year of 9MP (9th Malaysia Plan). The development expenditure will be the balance of the 9MP."

He was replying to reporters on the size of Budget 2010 after launching the National Accountants Conference 2009 here.

Budget 2009 totalled RM207.9 billion, exluding the two stimulus packages amounting RM67 billion announced later.

Husni said the ministry was in the final stage of preparing of next year's budget and would be looking at fine-tuning all the inputs gathered from various groups.

The new economic model, meanwhile, would be incorporated under the 10th Malaysia Plan that will be unveiled in June next year, he said.

Less goodies

Meanwhile a tax expert said that there would be less goodies expected in the upcoming
budget as the government strives to balance its large

Horwath tax partner Poon Yew Hoe said the government would likely find ways to expand tax revenue to meet collection targets.

In this respect, he said, the GST or Goods and Services Tax is expected to be announced soon, as a means of enlarging the government's tax revenue.

"The GST widens tax income for the government as income tax collection fluctuates most of the time," Poon said during a joint media briefing by RHB Banking Group and Horwath on the 2010 Budget and Tax Planning.

According to Poon, the implementation of the GST however, needs to be done at an appropriate time and when the economy is on a stronger footing as well as accompanied by a reduction in income tax.

Stiff competition

In view of the recovering economy, he said small and medium enterprises (SMEs) should be given more tax incentives to stimulate growth.

This could be in the form of a reduction on Employees Provident Fund (EPF) contribution from employers and allowances for reinvestment.

He also urged the relaxation on requirements to claim the reinvestment allowance (RA) which is granted for investments on upgrading of production facilities.

In terms of further tax incentives to attract foreign direct investment and boost Malaysia's competitiveness, Poon said there was enough at present.

However, he noted, Malaysia will have to face stiff competition from other major economies such as China and India.

- Bernama

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