KUALA LUMPUR (Oct 29): The government is expecting its consolidated general revenue to decline by 3.3% to RM282.9 billion in 2021, mainly due to lower revenue from the federal government and federal statutory bodies.

The consolidated general government revenue comprises the revenues from the federal government, state governments, local governments and federal statutory bodies that undertake the government's principal economic functions.

In the 2022 Fiscal Outlook Report, the consolidated operating expenditure is estimated to be lower by 1.8% at RM259.3 billion, amid the federal government’s expenditure rationalisation.

As revenue is projected to decline at a faster pace than operating expenditure, the general government’s current surplus is expected to fall 17% to RM23.5 billion from RM28.3 billion in 2020.

Meanwhile, the consolidated development expenditure is projected to rise by 22.3% to RM68.5 billion, mainly due to higher federal government development expenditure.

“With the federal government’s additional spending from the Covid-19 fund, total expenditure is expected to increase to RM366.8 billion (2020: RM358.1 billion).

“Consequently, after netting off intra-transfers and net lending, the general government’s overall deficit is expected to increase to RM84 billion or 5.5% to GDP in 2021 (2020: RM65.6 billion; 4.6%),” the report noted.

On the other hand, the state governments’ consolidated revenue is estimated to increase 3% to RM35.4 billion or 2.3% of GDP, of which RM28.7 billion or 81.1% is contributed by state-generated revenue, while the balance is accounted for by federal government transfers and grants.

The main sources of revenue include sales tax, petroleum royalties, investment income, land premiums and land taxes.

“In terms of state-generated revenue, Sarawak, Sabah, Selangor, Terengganu and Johor are the main contributors, accounting for 85.5% or RM24.5 billion,” it said.

Tax revenue is estimated to contribute some RM9.5 billion or 26.7% of the state governments’ total consolidated revenue, with direct tax collection projected at RM3.5 billion, mainly comprising tax on natural resources such as land, mines and forestry.

Meanwhile, indirect tax is expected to contribute RM6 billion or 63.3% to the total tax revenue, mainly attributable to sales tax on petroleum products totalling RM4.2 billion.

Non-tax revenue is expected to stand at RM12.6 billion or 35.6% of the total consolidated revenue, mainly comprising petroleum royalties (RM3.7 billion), investment income (RM3.2 billion) and land premiums (RM2.1 billion).

The state governments' operating expenditure is expected to increase by 8.7% to RM15.2 billion, from RM14 billion in 2020, due to higher supplies and services, as well as emoluments.

Similarly, the consolidated development expenditure is expected to increase 22.6% to RM12 billion.

For more stories on the Economic Report 2021/2022, click here.