PETALING JAYA: Budget 2026 must prioritise raising household incomes instead of funnelling money into special projects, said economist Dr Geoffrey Williams.
The founder of Williams Business Consultancy said Putrajaya’s fiscal strategy should focus on measures that directly improve living standards, such as converting Sumbangan Asas Rahmah into a monthly scheme or expanding it into a universal basic income (UBI).
“The government should forget special projects, such as the green economy and artificial intelligence, and leave those to the market. To stimulate the economy, they need to raise incomes, which in turn would raise spending, help SMEs, and push investment and growth.”
He said Sumbangan Asas Rahmah could be redesigned for greater long-term impact.
“For an additional RM11.4 billion, it could be expanded into a UBI providing RM100 per month to 22 million people.”
Williams downplayed the likelihood of sweeping tax changes in Budget 2026, noting that the recent sales and service tax (SST) hike has already taken effect while the high-value goods tax was withdrawn.
He said an e-payments tax (EPT) remains a potential option, describing it as a “low-rate levy with minimal impact”.
On the topic of “sin taxes”, he cautioned against further increases.
“Alcohol taxes are already very high and tobacco taxes, although sometimes justified for health reasons, do not generate much revenue and encourage smuggling.”
He questioned the fiscal benefits of petrol subsidy rationalisation, saying it is not well targeted to protect vulnerable groups.
“The saving is projected to be as little as RM2.5 billion, compared with the RM8 billion previously announced. It is also not targeted at protecting vulnerable groups because it is available to everyone for purchases under 300 litres per month,” he said.
Nonetheless, he estimated that total savings from subsidy rationalisation across petrol, electricity and other sectors could reach RM17 billion, with another RM10 billion expected from higher SST collections.
“These savings could be redirected to health, education and social protection. But there are signs that this money may just go into operational expenditure,” he warned.
Williams stressed that Malaysia’s fiscal position is sound and the government’s next step must be to lift household incomes.
“Anything else is a distraction from the core aim of improving the standard of living for the rakyat,” he said.