The government is considering the possibility of exempting the Goods and Services Tax (GST) from the purchase of RON 95 petrol and diesel, according to a Bernama report.
Deputy finance minister Datuk Seri Ahmad Maslan said that this is because at present, the two fuel commodities are exempt from sales tax at rates of 58.62 sen a litre and 40 sen a litre, respectively.
The subsidisation and sales tax-exemption of fuel is a huge cost to the government, he said, adding that the government has not officially decided yet if GST will be imposed on the purchase of fuel.
“(Translated) The government wants to see how much savings (can be obtained) from this move before making a subsidy rationalisation,” he said on Thursday.
Ahmad said that at present, RON 95 petrol is priced at RM2.10 a litre after a 71 sen government subsidy, and diesel at RM2.00 a litre after a 74 sen government subsidy.
He explained that the breakdown of total petroleum subsidies from 2000 to 2014 were 50% for petrol, 40% for diesel and 10% for liquefied petroleum gas (LPG).
The government paid RM3.425 billion in petroleum subsidies in 2000, RM2.398 billion in 2001, RM917 million in 2002, RM1.823 billion in 2003, RM4.788 billion in 2004, RM8.164 billion in 2005, RM7.281 billion in 2006 and RM8.770 billion in 2007, Ahmad said.
The figure rose sharply to RM15.378 billion in 2008, due to the global oil price jump. Subsidies paid in subsequent years up to 2013 were RM5.593 billion, RM9.065 billion, RM20.275 billion, RM24.726 billion and RM23.458 billion, while this year’s estimation is RM22.24 billion, he added.