KINIBIZ Budget 2016 was perhaps one of the more widely anticipated federal budgets in recent times, the big question being how the government would deal with falling revenue as a result of the plunge in oil prices. In light of this, preparing a budget which carried the theme of fiscal responsibility while protecting the welfare of the rakyat looked like a serious challenge for the government.

Many budget watchers expected that the government would have to deal with this by cutting its operating budget, in order to meet its fiscal commitments and maintain its development budget which covers economic and social projects, crucial to economic growth.

However Budget 2016 did not follow those predictions, in fact the operational budget went up as did the development budget. And to cap it off, the government’s fiscal deficit targets are more or less intact.

What saved the day was a significantly better collection from the Goods and Services Tax (GST). The government’s initial projections were significantly surpassed and from expecting to collect RM21 billion for 2015, it now will net RM27 billion. This not only lessened the loss of oil related revenue, it totally mitigated it.

So much so, the government even felt that it could afford to forgo some future GST collection and added more goods to the exempt and zero-rated supply lists. This included a range of medicines and basic food items. Prime Minister Najib Abdul Razak said, “I am pleased to announce the government is prepared to forgo the GST revenue on several basic necessities.”

For the full story go to KINIBIZ .

This article was written by Stephanie Jacob.