Taxpayers receive wider benefits despite missing out on direct handouts
KUCHING: Middle-income Malaysians who feel they pay substantial taxes without receiving enough government assistance are still benefiting from public services and subsidies funded through the country’s tax system, Finance Minister II Senator Datuk Seri Amir Hamzah Azizan said.
He said education, healthcare, infrastructure and fuel subsidies benefited Malaysians across income groups, even if some taxpayers did not receive direct financial assistance.
Speaking during a recent Financial Faiz Podcast interview on Budget 2027, Amir Hamzah addressed concerns that the M40 group was contributing more in income taxes than it received in government support.
He explained that Malaysia’s progressive taxation system required higher earners to contribute more so that essential services remained accessible to those with fewer financial resources.
“Those who have greater ability to pay can help those who are less able to contribute.
“This principle is important because it helps create a more cohesive society and prevents the gap between the rich and poor from widening too much,” he said.
Amir Hamzah stressed that government revenue must prioritise basic public services before further tax reductions could be considered.
“Education and healthcare come first because these are basic services that must be provided to the people.
“After that, we look at infrastructure such as roads, electricity and water supply. These are basic societal needs,” he said.
Nevertheless, he said Budget 2027 included measures to ease taxpayers’ financial burden, including an increase in individual tax relief to RM12,000 and a one-percentage-point reduction in income tax rates for certain middle-income brackets.
He also clarified that moving into a higher income tax bracket did not mean an individual’s entire salary would be taxed at the higher rate.
Only the portion of income falling within that bracket would attract the higher rate, meaning workers would still take home more money after a salary increase.
Amir Hamzah said the government must also ensure that tax reductions did not undermine its ability to meet public spending commitments.
“If tax revenue falls too much, we will not be able to carry out other things that the government needs to do,” he said.
He added that stronger government finances could eventually allow further tax relief without compromising essential services.
The government’s wider objective, he said, was to ensure economic growth raised living standards and benefited Malaysians more fairly.
