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Friday, October 10, 2014

Petrol Subsidy excuses the government from finding real measures and policies to help the poor.



In the previous article, I included a proposal sent to me about introducing a petrol and diesel tax. Clearly, the proposal was meant to be a general framework only.
As the discussions show, there are misgivings as well as support for the proposal.

A few commentators missed the point that the proposal is linked closely to a desired redistributive effect- viz, the better off should be taxed more than the less off. That is the redistributive effect.

On the technicalities of modern cars- the list can always be made to include identifiable cars and exclude identifiable vehicles. What’s so difficult about that? The idea is to tax more those who can afford more expensive cars. If a 1.4 VW is more expensive than a 1.6 proton or a Japanese make, the VW ought to be excluded. The details can be worked out by experts.  There is always exception to the general rule. Don’t go berserk.

Now, if it were up to me, I would remove subsidies altogether therefore saving the government RM 21 billion a year preventing them from cock-a-doodle-doo each year about helping the poorer people. Why should a responsible government backbite and begrudge about helping its poor citizens?

This would then remove the petrol and diesel factor being a perennial excuse by the government to hide its failure in carrying out measures than can actually help the poor. 
For as long as subsidy on petrol is around, the government can excuse themselves from introducing real measures to help the poor. Otherwise, they will always say, we have given subsidies, so we don’t to have to think and introduce other substantive and more powerful measures to reduce poverty for example. 

Now, if subsidy on petrol is removed, the decision to do so must be accompanied by several measures such as:

·        Make the price of cars cheaper so that, the lower price of cars, can balance the higher price of petrol and diesel.

·        Make public transport more efficient not more expensive.

·        Reduce the cost of insurance on cars.

·        Allow fuel efficient cars to be imported freely.

·        Introduce a flat rate on road tax irrespective of the engine capacity.

·  

·       Let oil companies compete for our money by opening up pump prices.

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