The government’s plans to remove the current blanket subsidy and replace it with a targeted subsidy policy – which will begin with diesel and electricity, and later expanded to RON 95 petrol – should not be viewed negatively by those in the higher-income group, say a number of economists.
As the New Straits Times reports, these academic experts say that the move to preclude high-income earners from subsidies shouldn’t be seen as punishment by those in the tier as they could afford it.
“I don’t think the government’s move is to punish the T20s. Rather, it is in the nation’s interest to ensure a better wealth distribution among the population and to ensure that the government subsidies won’t be a growing financial burden as it is currently,” Universiti Kuala Lumpur’s business school associate professor Aimi Zulhazmi Abdul Rashid said.
“The targeted subsidy policy should be implemented to those who really need it and should not be abused, like what is happening now when subsidised diesel fuel is being smuggled to neighbouring countries,” he added.
However, he said that the classification of T20, M40 and B40 to depict income groups was too broad, and needed to be replaced with a more accurate, practical and focused approach.
“Income brackets need to measure the actual net disposable income for every household to reflect more accurately. The classification of the income group must also be revisited as differences in locations like rural and urban have high disparities in household income,” he explained, adding that the approach of doing away with subsidies could lead to those in high-income groups not declaring their earnings.
“T20 being the highest income generator to the nation’s economy will face the real economic reality once all subsidies are withdrawn from them, which will lead to top earners not declaring their income, as what has happened in the Scandinavian countries. To a certain extent it will encourage proxies, thus a better data collection with real time will be critical to implement the changes that will be introduced by the government,” Aimi said.
Meanwhile, Putra Business School associate professor Ahmed Razman Abdul Latif said those in the T20 income bracket would not be severely impacted if they no longer received any subsidies.
“The T20 can bear the higher cost of products and services if they are no longer eligible for subsidies as this group managed to recover the fastest in terms of their income and wealth after the pandemic. The tax rate imposed on them is also considered low as compared to other countries and therefore, they can afford such removal of subsidies,” he stated.
Razman agreed that the approach to remove subsidies from the high-income group was not an act of punishment by the government. “It’s not an act of punishment (to the T20 income group), but it is to reduce the wealth and income inequality among and between the groups,” he told the publication.
University Tunku Abdul Rahman economic expert Wong Chin Yoong was also on the same page regarding the topic, but said the move to remove subsidies should be done gradually and with assistance, as adjustment would take time.
Like Aimi, Wong cautioned that using T20 as a determining threshold was too ad hoc and could be counter-productive. “Who can argue convincingly that earning RM12,000 per month for a household with another three dependents can be considered as living a good life, if all the subsidies are eliminated? One should acknowledge the fact that T1 and T2 earning powers are very different,” he said.
As determined by the department of statistics Malaysia, T20 represents the top-tier households where the monthly income is higher than RM10,959. The category is further classified into two sub-groups, which are T1 and T2, where T1 represents households with an average monthly income of RM12,586, while T2 represents households with an average monthly income of RM24,293.
Of course, it remains to be seen how much the targeted policy will impact things down the line, and how the government will limit the effects of the inevitable, expected rise in the price of goods and services, which will surely come about and impact all income groups, including the M40 and B40. In any case, what do you think of the experts’ opinions? Share your thoughts with us in the comments section.
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expensive things getting cheaper, cheap things getting expensive, this is a route which killing lower and mid segment ppl.
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Of course T20 can afford it! They just pass the cost to M40 & B40 downlines. So targeted subsidy is actually hurting the poor not helping them! Yet another stupid idea from this stupid gomen.
Therefore, in order to prevent the T20 from passing the cost down to the M40 & B40, should the T20 be allowed to buy subsidized fuel together with the M40 & B40?
Yes they should.
Is a whole lot of problems to implement different pricing of goods for different people at point of sales.
The better way is always at the point of income, aka income tax. Everyone should be treated the same with income after tax.
So, are you saying that the T20 also deserve to enjoy the same fuel subsidies as the M40 & B40?
@Angry Voters. is all T20 doing business? Wat logic u talked abt?
They should really stop all the illegal smuggling happening.
PN Pas couldn’t come up w this amazing Targeted subsidi plan.. for 33months makan gaji buta… Pilfered subsidi minyak peket.
obviously Those upper north pembangkang states Pipu are the national traitors.. smuggled minyak subsidi
Of course T20 can afford it! They just pass the cost to M40 & B40 downlines. So targeted subsidy is actually hurting the poor not helping them! Yet another stupid idea from this stupid gomen.
flip flop country with always double standard…wtx
Lets not worry.
Let the Rafizi n Salluhuddin n CO keep talking.
By next, year..they can flip flop n u turn if they need perpetuate the subsidy to stay in power till GE16.
Now,our Ringgit is sliding into RM5 to the Dollar..that is more worrying. YOur favourite sunkist orange may rise to RM4 per biji from RM3 per biji now.
Ask boss for another increment
Why not just keep it stupid simple? Just remove the fuel subsidy, and then subsidise the essential service more.
Yes, petrol goes up for everyone, but imagine free textbooks, food coupon for the needy, free childcare for the needy (so they have more time to go work).
Just basic safety net for everyone, after the basic, those who work harder will earn more. That’s fair right?
Agreed. Remove blanket subsidy and provide aid via proper channels to the households that truly need them.
Also, subsidy encourage waste. If want subsidy, subsidise things that is good instead.
More expensive petrol would indirectly leads to less usage overall and likely cleaner air quality for us all.
Ah Chong, i think it’s not tht straight fwd. Remember last time there was price increase everywhere when fuel price up? the spill over effect is high. How abt those depend on cheap fuel to sustain like food/ehailing, transport, logistic, salesman, etc. i think we r not ready for this drastic move. The gment shld encourage (trade in rebate)and speed up the ownership of ev/phev/hybrid car by making it more affordable like myvi/bezza price. Built more solar hybrid charging station. So when majority use EV, the usage of fuel will go down, hence less subsidized. For the border pump station, suggest tht all pump must read IC to authorised pump, so foreigner unable to enjoy subsidised fuel& the authority can also see who (local)pump suspiciously alot. Tq.
It is very difficult to implement what price of the fuel based on your income tier on the fuel pump. Why not introduce a lower grade petrol like RON91 which is fully subsidized. Those grade of Petrol can be used by almost all of the vehicle for B40. More expensive vehicle can’t use those low graded fuel unless they accept consequeces. Lastly, there will be a limit of availability of the fuel per month to avoid any potential abuses.
If they r so smart, they won’t rule this country
academic experts are only good at academics and they will give their point of view based on theory. in practical, they are not good at it. even if T20 can afford to pay for fuel, electricity and diesel without subsidy, they have worked hard for years, planned out their finances and life well to achieve this stage. How about the B40? well, while the T20 is planning and working hard for it, the B40 is busy wasting their time doing unproductive things and are short-sighted like rempit, not holding to a proper job for long and not improving themselves through education and financial management. Just like what Bill Gates quoted “If you are born poor, that is not your mistake but to die poor, it is your fault”.
you need to get out to see the real world, Ben. Dont just read theories and internet forums. In the real world, its not easy to find a good paying job. If you’re the owner of a restaurant, and a homeless man walks into your shop, ask for job. Would you give him one? You wont. You will prefer to hire someone who dress smart and has a home. That homeless man is not lazy, just not given fair advantage due to his background. Same for many B40. They are born poor. They have no home. They work for scraps, so cant afford universities. Stop sounding so entitled Ben Yap. I have watched many of your comments here, you must be a rich entitled brat who thinks he knows everything. be real.
thank you for standing up to B40. Not all is lazy.
And to rich people born into rich family since birth, dont tell us you working hard too. Maybe you do, but pls dont pretend you know what struggle is.
There are many successful people who managed to turn their lives around from B40 to M40 or even some are T20. if they can turn their lives around, why not the others?
If all B40 work hard can easily become M40/T20 who going to do B40 job?
If already poor, than beranak ramai-ramai. become more poor. whose fault is this? T20 fault?
bodoh quote Bill Gates.
He was born in a RICH family. stupid quote.
born rich becoming more rich is very easy, stupid.
Gov definition of T20 is as follows :
1. Ali/Ah Chong/Muthu with 3 kipas, 4 aircon
2. Ferrari owners who can easily pay rm1 million for FF number plate without blinking
*PS: Ali/Ah Chong/Muthu tax rate increased recently cos earning >rm100k per year is considered KAYA RAYA
this is true. The grouping is seriously misleading.
The group people by household income.
imagine someone earn 5K in KL, compared to someone earning 5K in Setiawan. The one in KL would be livin in near poverty, while the one in Setiawan has a bungalow and maybe 2-3 cars at home. But both also grouped in the same income group.
even 10k household income also have to live frugal, cannot simply spend money if living in KL. rent/mortgage already can kill us. Unless single person, maybe still OK. if got old parents, or kids, confirm not enough.
They cannot categorised t20 from 10k+ income starting. Maybe 30k and above can considerlah.. 10k+ for a whole family of 4 is just ok. If they count individual maybe can, but for a household??? Those household within 10-20k (husband&wife) are mostly employed not rich businessman. They shld categorised as m40. Now a new condo cost almost 6xxk, landed touching 1 mil..paying mthly installment already how much gone..not like 20yrs ago, property price was low.
Hello, I not kaya raya hahaha. Economy rice sometime I take all vege okay.
If no more fuel subsidy I need change to ex5.
Everything is expensive now. Even MCD become luxury food.
Refer my name
so what have you contributed to society lately?
Order capati satu!
Refer my name
If your parents named you Rasuah, most likely they didn’t want you.
Don’t la pandai cut cut cut saja. Give clear cut plan what you want to do with the money saved. Kasi kroni lagi ka. U save 30billion but 20 billion your pocket, 9 billion your frens pocket, 1 billion flows through different types of government agencies and kena makan left right center then only left 10-20million for rakyat and ask us to syukur negara masih aman. What logic is this.
ya like all these reg plate being auctioned for millions. what they do with the money? bonus to the high ranks?
“to reduce the wealth and income inequality among and between the groups”
To reduce by using t20 hard earned money that paid as tax to subsidy the rest? M40 and B40 should think of how to increase the wealth themselves. My salary alone more than T2. The time I was working 7/24 for company project, the time I studies MBA after working hours, what were these M40 and B40 doing?
Yes, I deginitely have no problem if government removes all these subsidies. But why I should allow Government uses my hard earned money paid as tax to subsidize others? These people should think of how to increase their income, not using my money!
They need the majority m40 n b40 votes
The most affected will be the M40 income but T20 lifestyle kind of person. So time to cut astro, netflix, spotify, disney +, no more H and T emblem car,live at apartment close to where you work instead of double storey house away from town.
not everyone driving H and T are rich. Some drive T emblems like Tata and lorry driver driving H emblem like Hino.
T and H emblem car. Tata and Hino is lorry. Haiyo..
let’s revisit the fundamental of what has changed for the need to remove subsidy? is it because income tax has dropped? It it because sales tax of all sorts like excise duty, stamp duty, etc have been reduced? actually none of it. share the money government is getting from the ppl year over year, i can bet u it’s a growing line. So why need to remove subsidy? if dig dipper, reason is because the money is not spent wisely including billions that were transferred to personal accounts of a few in power. and government is not generating income for the country for what ever projects as well! So in the end, continue to squeeze the rakyat and split the mentality of B40 or T20 among the ppl. remember our country is free from natural disasters, and we have so much of natural resources. we should be a really wealthy country but look at today, we are struggling. and the ringgit value is another good KPI for the government to reflect.
one word: MISMANAGEMENT
our wealth has been mismanaged since forever.
each political party comes into power, try to do personal gain. Simple, just tell me how many ministers (or ex ministers) are poor. Their immediate family members too, all has multiple companies to their names. See Mahathir.
Just go by usage… limit subsidized petrol up to 100 liters per month. Since T20 uses big cars, they probably drink more petrol than 100 liters. Use IC and TnG payment for subsidized petrol for tracking.
Bring back the Regular Petrol meaning Ron 87.
as a t20 spending 2k on fuel every month, another 1k is no big deal
I wonder how gov is going to implement this targeted subsidized fuel. Imagine u have arrived at petrol station and u are going to refuel ur car, what kind of mechanism do they use to know whether u r eligible for subsidized fuel?
Me as b40 will help T20 pump cheap fuel..and i will get a small fee from them
T20 pays the most for tax yearly, indirectly paying the subsidies too. why not the government reduce the percentage for personal yearly income tax at the highest tier so only those who use the facilities pay the price. so the T20 will not be “double taxed”?
reduce the number of ministers and government staff (those lazy minum kopi bummers) and you will see big savings
T20 pandai avoid tax mah. So many people T20 I know can pay tax lower than M40.
T20: No worry….We dy change to EV car….
Gomen should just increase the road tax on high value or high powered vehicles. If the rich wanna save money, they can buy cheaper or smaller cars but the poor definitely can’t buy high value or high powered cars due to affordability. Gomen can save money doing silly surveys. Too many factors involved and if really implemented, confirm instant inflation, then the poor will be poorer. The M40 may fall into the B40 category also. Back to square one, maybe worse..
bring back GST.. Higher income salary earner already paying higher tax, but rich business men are those making real good money but dont pay income tax much.
GST is actually the simplest & fair solution, we dont have to do complicated subsidy policies that may just endup with another form of leakages
When GST was implemented before GE14, the
low income group were not exempted from it. When the low income group still makes up 40% of the nation’s population, GST may be seen as more of an overall burden.
gst is efficient tax system. only with Gst, Gov have more income to pay cash subsidy like brim to B40. no other country went backward by cancelling gst like us.
lifting up petrol & energy subsidy to the mass & business will eventually bring back the inflation to B40 as the price will be adjusted. we are not going anywhere.
what we need is reducing the real parity income. rich people can hide their income but they will sure consume more. only gst can really make them pay real tax. No GSt, rich men still the one the happiest paying less tax
During the pre-GE14 GST implementation, everyone, including those from the lower income group, was subjected to the same rate of 6%. As the lower income group is said to make up 40% of the country’s population, almost half of the people would then likely view GST as a burden. If GST’s priority is to help address the disparity in income, those from the lower income group should have been subjected to a lower rate, or even better, be exempted.
Countries like thailand and philippines allow their petrol companies to dictate selling price. Rich and poor alike pay the price. No subsidy.
Our RM have been depreciating against both philippine peso and tbaht due to heavy subsidies .
The solution is simple.by removing petrol/diesel/lng subsidy, our currency in theory will rise 20-40% to offset rising price of energy. No need for categorising as these will only encourage smuggling. Once subsidies removed, our petrol/diesel consumption will fall as smuggling will either slow down or stop.
The income bracket need to be revised for better accuracy..
The government said it will not be a punishment to T20. Don’t worry T20 sekalian. And good luck.