By DAVID TAN

LANGKAWI: Budget 2008 is expected to contain a host of “grassroots goodies” to bolster disposable income and address today’s higher cost of living.

Aseambankers chief economist Suhaimi llias said: “Budget 2007 cut corporate tax to 28%. This round we expect a cut in personal income tax to increase disposable income and spending.

“We also expect the government to increase the personal income tax allowances for child relief and insurance.”

Suhaimi was speaking to StarBiz at the sidelines of the Aseambankers Equity Investor 2007 Conference here on Sunday.

Suhaimi said he also expected the government to increase the amount of withdrawal from the Employees Provident Fund (EPF) second account, used for purchasing homes.

“We expect the entire withdrawal process to be made easier. The move is to stimulate demand for housing,” he said.

Suhaimi said the government would also maintain fuel subsidy for another year to ensure the stability of oil prices and to keep inflation in check.

“The oil and gas sector is contributing about 40% of total government revenue.

“Petronas, for example, is paying about RM54bil in income tax and dividends to the government. The contribution is about 40% of the government’s revenue,” he said.

Suhaimi said the government was also expected before year-end to spend another RM30bil for major infrastructure works, of which about RM3bil was for oil projects.

“In addition, the government’s net development spending allocation is expected to be ramped up to RM50bil next year from RM42bil this year, given the roll-out of major infrastructure projects under the Ninth Malaysia Plan, which should be good for the construction sector.

“We, therefore, expect the property sector – especially the mass market and the real estate investment trust segments – to be a major beneficiary of this budget,” he added.