Tuesday, September 2, 2008

Budget 2009 - Any Goodies For You & Me?

The good old politicians claimed the budget put money into our pockets. Hmm! 'our pockets' - you and me pockets or their pockets? It is a deficit, an expansionary budget as the main chunk is to pay for the operations. The budget deficit is projected at 4.8% of GDP, the highest deficit in a decade.

How about the next budget? How is the government going to cut the widened deficit next year? Time to introduce GST or other taxes to boost revenues? Probably not as these measures will lose them more votes. Seriously, it is time to cut the fat and excesses and reduce wastage at the bloated government set-ups.

Back to Budget 2009. How do we benefit? At a glance, I concluded that those in civil service will gain the most! As for private sector employees, time to restructure the paycheck. In the name of tax planning, reclassify the salary into various allowances i.e. travelling, handphone and Internet allowances and housing interest subsidy. All these are tax exempted. The total package remains the same but the 'take home' should be more. Additionally, the reduction in taxable income will put us in a lower tax bracket. More good news - there is some reduction in the personal tax rate with the highest rate at 27%. Ah-ha, for once, can trust these politicians - this is the money into our pockets!

Another incentive that is worth noting from investment point of view - 50% stamp duty exemption on loan agreement for medium cost houses below RM250,000. As the first RM100,000 is charged at 1% and subsequent at 2%, there should be a saving of RM2,000 at the maximum. Nothing superb but better than nothing for those that are house hunting!

The budget announcement injected some positives with KLCI rising above 1100 points for the first time in 2 weeks. However the political risk factor remains.

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