Tax relief could ease M40 burden, says consumer group

The Federation of Malaysian Consumers Associations (Fomca) claims that tax relief measures in the 2027 Budget could help alleviate financial strain on middle-income households, known as M40 families, according to Dr T. Saravanan, the group's chief executive officer. The proposed tax relief includes increasing the individual income tax relief from RM9,000 to RM12,000, alongside reductions in tax rates and wider deductions.

This change, according to Fomca, would allow M40 families, who often have commitments such as housing loans, vehicle payments, childcare, school fees, healthcare, and medical insurance, to retain more of their income after covering essential expenses. However, the consumer group stresses that tax relief alone is not sufficient to address the financial challenges faced by M40 households.

They urge the government to keep public healthcare, education, childcare, and public transport affordable and accessible. Additionally, Fomca calls for clearer communication and examples to explain how these changes benefit taxpayers across different income levels. They note that individuals without income tax or already with low tax liabilities may gain little from these adjustments.

The government's decision to increase the individual income tax relief to RM12,000, alongside reductions in tax rates for certain income brackets, has been welcomed by Fomca. The organization also praises the RM1 billion increase in funding for the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara) programs, which will expand to RM16 billion next year from RM15 billion this year.

These programs aim to ease daily expenses for Malaysians. Fomca supports the monthly Sara assistance of up to RM150 for eligible STR recipients and the RM100 assistance for those aged 18 and above not receiving STR aid, which will be distributed twice next year. Saravanan emphasizes that the adequacy of these aids must be evaluated based on the actual cost of living.

He warns that temporary relief from additional aid like RM50 or RM100 might not suffice as households continue to face rising expenses for essentials. The consumer group urges the government to consider factors beyond income classifications when determining eligibility for aid, recognizing that many M40 households, especially in urban areas with multiple dependents, also face significant financial pressure.

Ultimately, Fomca stresses the importance of strengthening price monitoring and enforcement, ensuring that aid recipients are not left out, and maintaining the availability of Sara-approved products at reasonable prices, including in rural areas.