Government revenue expected to go up to RM261.81 billion in 2019

PETALING JAYA: The Federal Government is expected to rake RM261.81 billion in revenue in 2019, translating into an increase of 10.72% from the RM236.46 billion this year, anchored by a slight increase in tax revenue and a significant rise in non-tax revenue.
The share of revenue to the gross domestic product (GDP) for 2019 is expected to be at 17.1% of the GDP compared to 12.2% from 2018.
Despite the significant reduction in consumption based tax, tax revenue is estimated at RM176.2 billion (RM174.7 billion) in 2019 and continues to be the key component in overall revenue.
As for percentage to GDP, tax revenue is expected to fall to 11.5% from 12.2%.
Direct tax collection which constitutes 76.7% to tax revenue is estimated at RM135.1 billion an increase of 1.2% as compared to 2018 revised estimates (RM133.5 billion), contributed mainly by higher collection from personal income tax of RM18.1 billion compared to RM16.8 billion estimated in 2018, on account of modest assumption of crude oil prices.
Individual income tax and company income tax are forecasted to register RM35 billion and RM70.2 billion respectively, with services and financial sectors being primary contributors for the latter. This will be further supported by the Inland Revenue Board's (IRB) efforts to enhance auditing and taxpayers compliance.
Meanwhile, revenue from other direct taxes comprising stamp duties, real property gain tax (RPGT) and other taxes is expected to increase by 4.4% to RM8.2 billion. The increase in stamp duties and RPGT to RM6.3 billion and RM1.8 billion respectively are in line with the stable property market.
Indirect tax collection on the other hand, is expected to decrease slightly to RM41.1 billion from RM41.2 billion due to lower contribution of the Sales and Service Tax which is expected to rake in RM22 billion in tax collection.
Excise duties collection, on the other hand, is expected to improve by 6.4% to RM11.4 billion on account of higher demand for new vehicle models.
Export duty on the other hand is forecasted to remain at RM1.6 billion in tandem with the assumption of stable crude oil price in the medium term, while import duty projected to grow 5% to RM2.9 billion in 2019 driven by higher estimated duty collection on complete built-up motorcars, machines, spare parts, resin and plastic materials.
Non-tax revenue is expected to surge 38.67% to RM85.7 billion from RM61.8 billion on the higher collection of interest and return of investments. This is to be driven primarily by higher dividends by Petronas amounting to RM30 billion. Petroleum royalty, on the other hand, is forecasted to be at RM5.6 billion in line with modest crude oil price forecast.
The share of petroleum-related revenue, excluding the special Petronas dividend, is estimated to increase only by 19.5% compared to 21.7% in 2018.
"Even with the reduction in consumption-based tax, the share of petroleum-related revenue is lower than the annual average of 34.6% recorded during the 2009-2014 period. This indicates that the government's sources of revenue remain fairly diversified. The government is expected to enhance its non-petroleum revenue base particularly from the efforts taken by tax reform initiatives".
Additionally collection from licences and permits are estimated to increase 6% to RM15.6 billion. The increase is mainly contributed by higher collection from petroleum royalty, motor vehicle licences and levy on foreign workers.
In 2018, the government is also expected to receive a higher dividend from Khazanah Nasional Bhd amounting to RM2 billion and a one-off contribution of RM4 billion from Retirement Fund(Incorporated) (KWAP). This is however not included in the forecast for 2019.
The government noted that while it is important to have an efficient and well-designed tax system as well as to ensure the revenue collected is redistributed to the people in the form of quality public services and infrastructure as well as people centric programs and projects.