Anwar hits the brakes on new taxes, subsidy cuts in Malaysia's 2026 budget

He announces new revenue streams, vows not to add any more financial burden on the public

- Shannon Teoh Malaysia Bureau Chief

Prime Minister Anwar Ibrahim hit the brakes on unpopular new taxes and subsidy cuts when unveiling Malaysia's Budget 2026 on Oct 10, appearing to have landed on a comfortable balance between fiscal discipline and populist concerns.

Datuk Seri Anwar, who is also finance minister, framed Budget 2026 as expansionary, even though the Treasury’s proposed spending of RM419.2 billion (S$128.7 billion) was smaller than Budget 2025's RM421 billion.

To achieve this, his administration has included contributions by government-linked and state-owned bodies. They are expected to pour in RM50.8 billion for a final tally of RM470 billion allocated for 2026, compared with RM452 billion in 2025.

Mr Anwar announced several new revenue streams, such as raising the excise duty on cigarettes by 2 sen per stick, and an increase of 10 per cent on liquor. However, he also vowed not to add any more financial burden on the public to fund infrastructure and aid.

At the same time, he announced continued financial assistance, such as yet another RM100 one-off cash aid for 22 million Malaysians above 18 in February 2026, ahead of Ramadan and Chinese New Year. Gig workers will also get matching contributions of up to RM600 a year for their retirement savings scheme.

“We reject the culture of reckless debt accumulation, we fight against leakages and corruption, and we despise the lavishness of the elite, paid for with the people's suffering,” Mr Anwar said while tabling the budget in Parliament.

Since 2023, his government has cut subsidies to various items, especially energy — including electricity, diesel, natural gas and most recently RON95 petrol, the most widely used transport fuel - alongside an expansion in taxes, most notably the sales and service tax (SST).