It’s an election budget, say economists

In today's 2027 budget announcement, economists have characterized the document as an "election budget" filled with cash handouts, subsidies, and tax breaks. However, this approach may leave certain households struggling due to factors such as low wages, gaps in assistance, and high government spending. Sunway University economist Yeah Kim Leng noted that the budget aims to ease living costs and provide a short-term economic boost through increased cash handouts and subsidies.

The income tax relief, which increases personal tax relief from RM9,000 to RM12,000, is expected to benefit middle-income earners by putting more money in their pockets. Yet, economist Ahmed Razman Abdul Latiff cautioned that the budget's success should be measured by its impact on household incomes. Razman pointed out that while assistance has been expanded, it may not adequately address households facing high living costs or additional care responsibilities, such as the middle-income bracket, gig workers, and those just above aid thresholds.

Razman also questioned the significant portion of the estimated operating expenditure, which makes up nearly 82% of the RM460 billion budget, leaving only RM83 billion for development purposes. He emphasized that the real measure of success lies in whether assistance reaches those who need it most and whether economic growth generates sustainable jobs and better incomes.

The 2027 budget includes an increase in Sumbangan Asas Rahmah aid to RM150 a month for up to nine million recipients and provides RM1.3 billion in assistance for nearly 200,000 senior citizens. Malaysian University of Science and Technology economist Barjoyai Bardai observed that although the budget acknowledges pressing issues like healthcare and supports senior citizens and contract doctors, it has not sufficiently addressed low wages.

Bardai estimated that local workers need at least RM2,300 to RM2,400 to cope with living costs, highlighting that the proposed minimum wage increase to RM2,000 from next June is insufficient. While efforts have been made to encourage the corporate sector and government-linked companies to increase salaries, these measures are not mandatory.

Bardai suggested that the M40 and middle-income groups might still be left behind despite the increase in minimum wages. He recommended reducing income tax rates or increasing tax relief to ease the financial burden on these groups.