The RON 95 petrol subsidy rationalisation will be the government’s focus this year before a carbon tax is introduced in 2026, according to second finance minister Datuk Seri Amir Hamzah Azizan. First announced during Budget 2025, the carbon tax is not a CO2-based road tax like in other countries, but is targeted at iron and steel, and energy industries, with the revenue being used to fund green research and technology programmes.
As reported by The Sun, Amir noted that Malaysia must first address the issue of fuel subsidies, particularly those involving the energy sector, before implementing the carbon tax. “As we embark on this transition, we must ensure that no unintended consequences are embedded within our system. For instance, Malaysia has yet to implement a carbon tax as part of its policy framework. While it is scheduled for rollout by 2026, there are important precursor steps we must take,” he said.
“One major issue is the existing distortions in the system, especially the subsidies provided to the energy sector. A key objective now is to begin scaling back these subsidies. It doesn’t make sense to impose taxes on one side while simultaneously providing subsidies for petrol, diesel and other fuels,” he added.
Amir also emphasised that subsidy rationalisation is a critical step toward establishing a strong foundation for building sustainable mechanisms and policy frameworks. “As a result, we can expect the introduction of structured measures, including climate action frameworks, robust measurement tools, and ultimately, the implementation of a carbon tax to support these initiatives,” he explained.
“If we want this transition to be sustainable and impactful, the entire system must respond. It cannot be driven by isolated announcements or standalone policies. The challenge for the government is to tie everything together coherently and effectively,” he continued.
In another related report by NST, Amir explained that market distortions such as blanket subsidies must be addressed before a carbon tax can be implemented. “There are distortions happening within Malaysia’s system today because we have provided blanket subsidies, which is a big issue,” he said.
“We saw good behavioural change (following the diesel subsidy rationalisation last year). Malaysia was no longer the cheap destination for people to source subsidised fuel for smuggling. We also changed the way diesel is supplied to industries to prevent people from taking fuel meant for the public and using it for commercial operations,” he added
Yesterday, prime minister Datuk Seri Anwar Ibrahim said the RON 95 petrol subsidy rationalisation programme will proceed as planned, adding that it would not affect 85% to 95% of the population.
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jgn cakap aje. do it
PMX also cakap atas aje but xde bola to fulfill his promise.
Lets hope he also got no balls to do subsidy rationalisation.
so since government will be taxing further the mahakaya, how about removal of stacking of pensions by politicians? when comes to the general public PKR is hypercritical about saving money in the name of better usage of the money. when it comes to their own benefits such as stacking of pensions, they deliberately ignore it.