THE federal government fiscal deficit is projected to significantly decline to 4.7 per cent of gross domestic product (GDP) next year, says the Finance Ministry.
Revenue for the federal government is expected to increase 1.9 per cent to RM186.9 billion next year in tandem with better prospects for the domestic economy, the ministry said yesterday.
Fiscal policy in 2012 will also remain prudent and supportive of economic growth, with total government expenditure expected to be stable at RM230.8 billion, the report said.
It said higher commodity prices, access to financing and firm corporate earnings as well as strong labour market conditions are expected to further strengthen private consumption and investment activity, resulting in higher tax revenue of RM135.6 billion.
All components of tax revenue, direct tax (RM102.1 billion) and indirect tax (RM33.5 billion) are expected to register a positive growth, reflecting stronger expansion of domestic economic activity across all sectors as well as gains from robust intra-regional trade.
The report said receipts from petroleum income tax (RM26.2 billion) are anticipated to be firm, benefiting from steady regional demand for crude oil from countries such as Australia, India, Thailand, Philippines and Korea.
Proceeds from non-tax revenue comprising mainly investment income, licences, registration fees and permits as well as revenue from federal government territories are, however, expected to be marginally lower at RM51.3 billion.
It said the government was committed to improving its fiscal position as reflected in the lower deficit anticipated for 2012, while supportive of the growth momentum and reform initiatives.
The 2012 Budget will reinforce efforts to boost the competitiveness of the economy through the timely realisation of reform initiatives while promoting inclusive and sustainable growth.
“Towards this, a substantial sum is allocated for programmes under the National Key Result Areas (RM7.4 billion), National Key Economic Areas (RM4 billion) and Strategic Reform Initiatives (RM121.5 billion), which are crucial to move the country to a higher income bracket,” it added.
The Finance Ministry said 2012 Budget will also implement projects and programmes that will boldly tackle the rising cost of living, continue to promote the well-being of Malaysians, stimulate economic growth in rural areas as well as accelerate private investment. — Bernama