gst-petrol-diesel

Although RON 95 petrol, diesel and LPG have officially been declared free of Goods and Services Tax (GST), Prime Minister Datuk Seri Najib Tun Razak announced last Friday in his Budget 2015 speech that a mechanism or plan for the rationalisation of subsidies for these fuels would be unveiled “at the soonest time.”

Well, this is certainly sooner than we expected, for according to Bernama, second finance minister Datuk Seri Ahmad Husni Mohamad Hanadzlah has said that the plan is ready, and the PM will announce it in the next few weeks.

“The (subsidy rationalisation for) commercial vehicles will be implemented first and that for passenger cars will come later,” he told reporters after the Budget was tabled on Friday.

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Domestic Trade and Consumer Affairs ministry (KPDNKK) secretary-general Datuk Seri Alias Ahmad said before that diesel subsidy rationalisation was expected to be implemented in January 2016, while that for petrol could happen two to three months after.

The new mechanism is said to ensure a more “targeted” subsidy – in other words, ensuring subsidised fuel is sold only to those deemed eligible.

Whether it’ll just be a two-tier system (where you either buy subsidised or unsubsidised fuel) or if the levels of subsidy vary according to your income (higher income, less subsidy) remains to be seen. It’ll also be interesting to see how one is required to show proof of income at the pumps… or is there another way around it?

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