In a statement today, he said a prosperity tax in Budget 2023 could have potentially shaved 5%-6% off the 2023 earnings of the FBMKLCI’s component stocks.

“Without prosperity tax being imposed, analysts have a consensus forecast earnings per share (EPS) growth rate of 20.1% for 2023 compared to -1.3% for 2022,” said Wahid, who added the decision not to include a prosperity tax “augurs well for the capital market”.

He was referring to the one-off prosperity tax introduced by the federal government in Budget 2022, whereby corporations’ chargeable income above RM100 million was taxed at a rate of 33%, instead of 24% previously. The tax is on a company’s chargeable income and not its net profit.

Last September, then finance minister Tengku Zafrul Aziz said the government was targeting at least RM4 billion in additional revenue from Cukai Makmur (or prosperity tax) for the assessment year 2022.

The prosperity tax was introduced by the government to increase tax revenue collection to finance the special rehabilitation programmes to help target groups affected by the Covid-19 pandemic.

Commenting further on Budget 2023, Wahid said the first step towards any transformation or reform is “to admit that we have a problem”, to put the constituents on a burning platform for greater sense of urgency and to come up with appropriate solutions.

“I am glad the prime minister is committed to an expansionary budget but with long-term financial sustainability and fiscal responsibility by reducing fiscal deficit to 5% of gross domestic product in 2023 from 5.6% in 2022, and further to 3.2% in 2025,” he added.