Thursday, June 5, 2014

Stop the waste from fuel subsidies


June 5, 2014
Taxpayers tolerate up to RM7 billion in subsidy leakages.
france-fuel_2298290bAccording to Maybank’s research unit, Malaysian taxpayers tolerate up to RM7.0 billion in subsidy leakages every year as the result of diesel and petrol smuggling to foreign countries.
The International Monetary Fund (IMF) meanwhile estimates that the top 40% of Malaysians that fall in the high-income group enjoy 80% of the nation’s fuel subsidies.
A total of RM24.8 billion is budgeted for fuel subsidies in 2014, but out of this, only RM3.5 billion is projected to benefit those in the low-income group after taking into account the leakages from fuel smuggling.
In reality only 14.1% of the fuel subsidy is benefiting the low-income group while 28.2% is lost to smuggling and the remaining 57.7% is enjoyed by the high-income group who have more and bigger capacity vehicles.
The proposed multi-tier pricing for fuel that is targeted towards a group system through the use of the MyCard is not going to work in Malaysia because of lax enforcement and smart consumers who will exploit the system. There is also the administration hassle of implementing such a system.
We do not need to hire foreign management consultants to devise an effective and easy fuel rationalisation programme for us. All the BN government requires is the strong political will to abolish all kinds of fuel subsidies immediately and re-channel one third of this savings to the rakyat through BR1M.
The BR1M beneficiaries will then be able to collect RM1,200 for a household and RM600 for a bachelor in the targeted low-income group as promised in BN’s general election manifesto without draining the limited resources of the treasury coffers.
The remaining 2/3 in savings from this exercise that will total to about RM16.5 billion can be better used for national development projects or budget deficit reduction purposes.
An extra RM500 cash reimbursement over and above the promised BR1M handout should be able to help the poor manage the ensuing inflation in the year following the fuel subsidy cut.
Our government is too kind to ‘subsidise’ foreigners directly and indirectly with our hard earned money. This wastage of taxpayer’s money must be stopped immediately.
~ Free Malaysia Today

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