The following are salient points of Budget 2007 which was announced by Prime Minister Abdullah Ahmad Badawi in a 110-minute speech in Parliament this afternoon.

Deficit reduced to 3.4 percent

Government expects growth to remain strong - at 5.8% this year. The budget deficit, the 10th in a row, will be further reduced to 3.4 percent of the GDP in 2007.

This is slightly lower than the 3.5% for 2006. The budget deficit was slashed from 5.6% in 2002 to 3.8% in 2005.

Corporate tax slashed

The corporate tax rate will be reduced in two stages - from 28% to 27% for 2007, and it will be further reduced to 26% in 2008.

To promote corporate social responsibility, the ceiling for tax deduction on contributions by the private sector to charitable organisations and sporting activities be increased from 5% to 7% of aggregate income.

Increase in tax rebate for personal computers * [correction]

The current rebate of RM500 for the purchase of a computer will be increased to RM3,000.

The rebate, which is presently being given once every five years, will now be given once every three years.

Instead of the rebate being offered on a per household basis, each taxpayer will now be eligible to claim the rebate.

Correction: The current rebate of RM500 for the purchase of a computer will be abolished to be replaced by a tax relief of RM3,000. The tax relief will be given once every three years, while the rebate is presently given once every five years. We regret the error.

Increase in tax relief for books

Tax relief for the purchase of books will be increased from RM700 to RM1,000 per year.

Higher oil subsidies

The government will incur a total of RM19 billion this year in the form of oil subsidy and tax foregone. This will be RM3 billion higher than the total of RM16 billion incurred in 2005.

The oil subsidies is expected to be also around RM19 billion in 2007 based on the assumption that oil prices will hover around US$70 per barrel.

Bonus for civil servants

Two months bonus for civil servants earning up to RM750 a month.

One month bonus for those earning more than RM750 a month, with a minimum bonus of RM1,500.

Bonus will be paid in two equal instalments in October and December this year.

One-off payment for pensoniers

There is no increase in pension but pensioners will receive a one-off payment.

Those receiving pension less than RM750 a month will be given RM400.

Those receiving pension of RM750 and above will get RM200

Scholarships for students with 10 A1s

Students with 10 A1s in SPM, from families with income RM1,500 and below, will be given scholarships for tertiary education, regardless of race.

The government will award scholarships to outstanding students to pursue much sought after courses such as science, pharmacy, medicine and engineering at graduate and post-graduate levels, in local and renowned foreign universities.

Chinese and Tamil introduced in national schools

Chinese and Tamil languages will be introduced in some national schools to attract more Chinese and Indian Malaysian students.

From 2007, the Chinese language will be taught in 150 national schools, while Tamil will be taught in 70 national schools.

All examination fees to be abolished

All examination fees for UPSR, PMR, SPM and STPM in government schools will be abolished beginning 2007 academic session.

Monthly allowances to students from poor families to be increased from RM30 to RM50 for primary school children, and RM50 to RM70 for students in secondary schools.

Three new universities

Three new universities will be built - Universiti Darul Iman Malaysia (Terengganu), Universiti Darul Naim (Kelantan), and Akademi Tentera Malaysia to be upgrade to Universiti Pertahanan Nasional Malaysia.

Hike in sin taxes

Tax on cigarettes to be increased by one sen per stick, from 11 sen to 12 sen.

Liquor with alcohol content of more than 40% will be increased by RM5 per litre.

Assistance for early cancer detection

RM50 subsidy for every mammogram done in approved private clinics and hospitals. This represents about 50% of the cost of mammogram.

More funds for NGOs

The annual grant of RM20 million for NGOs to undertake women, family and community programmes will be increased to RM30 million.

Housing and patrol cars

RM2.2 billion to be allocated to build 46,000 units of government quarters for the police, armed forces, fire and rescue, customs and other civil servants.

An additional 2,000 police patrol cars to be deployed to ensure public safety and increase public confidence.

Developing Islamic finance

10 years income tax exemption for all Islamic banking and takaful (Islamic insurance) entities that conduct their business in foreign currencies.

An additional 20% stamp duty exemption for instruments related to Islamic financing for a period of three years.

10 years income tax exemption for lcal and foreign fund managers who manage Islamic funds for foreign investors.z

Personal tax relief on study fees, up to a maximum of RM5,000 per year, for Islamic financial studies in institutions of higher learning.

Focus on agriculture

The Fund for Food, which is help farmers to finance food production, will be increased by RM300 million to a total of RM1.9 billion.

Tobacco farmers, especially in Kelantan, will be encouraged to shift to other crops.

A new agriculture fund of RM200 million to be set up by government investment arm Khazanah Nasional to provide venture capital to finance new technology-intensive agriculture projects.

Promote tourism

To further promote Visit Malaysia Year 2007, income tax exemption for tour operators - those providing tour packages with at least 500 overseas tourists per year or 1,200 local tourists per year - be extended another five years to year 2011.

Tour operators be given excise duty exemption of 50% on locally assembled four-wheel drive vehicles.

Improve urban transport

Light rail transit tracks to be extended from Kelana Jaya to Subang Jaya/USJ and from Sri Petaling to Puchong (completion in 2009)

A new LRT line to be build from Kota Damansara to Cheras, which is expected to be completed by 2010.

The economy at a glance

Economic growth for this year expected to be 5.8%. For next year, it is projected to be 6%.

Private investment is expected to increase by 10.5%.

Public investment is set to grow at 8%. This follows a sharp rise in federal government development spending of 32.4%.

National savings remains high at 38.2%. Of total national borrowings, 95% is from domestic sources.

Inflation in the first half of this year has increased to 3.9%. It was 3% last year. Inflation was below 2% from 2000 to 2004.

Commodity prices to remain high next year, with rubber settlers in Felda schemes earning RM3,600 compared to RM720 in 2000, while oil palm smallholders earning RM1,300 compared to RM760.

Government boosts spending

In a marked departure from the last two Budgets, the government has sharply increased spending by 16.6 percent to RM159.4 billion for 2007.

The development expenditure alone has been increased by 31%, or a total of RM46.5 billion.

For the 2006 Budget, the government had allocated RM136.8 billion, an increase of 5% compared to 2005.

Government revenue is expected to increase by 11.8% to RM134.8 billion. Of this, nearly 40% is petroleum-related revenue, especially from state-owned Petronas.

The budget deficit for 2007 will be 3.4%.