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The first step towards any transformation or reform is to admit that we have a problem, to put the constituents on a burning platform for greater sense of urgency and to come up with appropriate solutions. This is exactly what the Prime Minister (PM) cum Minister of Finance did in presenting Budget 2023.
I am glad the PM is committed to an expansionary budget but with long term financial sustainability and fiscal responsibility by reducing fiscal deficit to 5.0% of GDP in 2023 from 5.6% in 2022 and further to 3.2% in 2025. This will be achieved, among others, by enhancing tax collection effectiveness and plugging leakages as well as broadening the revenue base with reintroduction of tax on luxury goods and capital gains tax (CGT) on shares in unlisted companies. The latter is optimal as it will encourage more unlisted companies to list their shares on the stock exchange and spur growth in the capital market.
One huge relief for the Corporate sector is the absence of prosperity tax in Budget 2023 which could have potentially shaved 5%-6% of the 2023 earnings of the FBMKLCI’s component stocks. Without prosperity tax being imposed, analysts have a consensus forecast EPS growth rate of 20.1% for 2023 compared to -1.3% for 2022. This augurs well for the capital market.
The enhanced commitment towards nature conservation and sustainable development must also be lauded. Overall an inspiring Budget 2023.
