‘MyKad for subsidy won’t solve problems’

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KUALA LUMPUR: The government’s proposal that MyKad be used when buying subsidised fuel by June next year overlooks the need to minimise leakage in public spending as well as the urgency of larger fiscal reforms, Pakatan Rakyat leaders say.

Instead, a holistic solution is needed to tackle long-standing issues, such as tax restructuring and raising wages, they noted.

“With the implementation of the goods and services tax (GST) in April next year, Putrajaya should not have lifted the fuel subsidies just yet,” PKR communications director Fahmi Fadzil told The Malaysian Insider.

“I have no confidence in the proposal to subsidise petrol using the MyKad, as irresponsible quarters can still find their way around it, for example by using other people’s identity cards,” he said.

Last Thursday, Deputy Finance Minister Datuk Ahmad Maslan said the new petrol subsidy rationalisation will use MyKad to ensure that only the low-income group would continue to enjoy subsidised petrol or diesel.

Fahmi said the focus should instead be on reducing leakages and promoting transparency in the administration.

PAS Research and Development Centre director Dr Dzulkefly Ahmad said Putrajaya should look into managing the country’s fiscal responsibilities instead of smaller matters, such as fuel subsidy.

“The issue here is not the targeted subsidy but the government’s commitment to increasing the people’s income and managing leakage as well as restructuring the tax system,” he said.

Dzulkefly added that Putrajaya would have to pay a huge sum to insert the details of people’s income into their MyKad.

He said the proposal appears to have overlooked the woes of the middle class who still suffer under the current economic system.

“Those with income between RM4,000 and RM5,000 are still caught in a bind,” he said.

DAP national organisation secretary Anthony Loke said Putrajaya should make such announcements only after sufficient studies have been carried out.

Parliament should set up a committee to discuss the plan before making any decisions, said Loke, who is the Seremban MP.

Ahmad previously said the proposal was still under study and the Ministry of Domestic Trade, Cooperatives and Consumerism had requested firms interested in developing the new mechanism to submit their working papers.

He said the new system would allow only Malaysians earning RM4,000 and below to enjoy full petrol subsidies.

He said the government has yet to decide whether the subsidy would be extended to those earning between RM4,000 and RM12,000.

Earlier this month, the price of RON95 petrol went up by 20 sen to RM2.30 per litre while diesel rose from RM2 to RM2.20 per litre. The ministry said the move was in line with its subsidy rationalisation plan.

“Despite the increase, the government will still need to spend more than RM21 billion on fuel RON95, diesel and LPG subsidies for this year.”

In Budget 2015, tabled on Oct 10, Prime Minister Datuk Seri Najib Razak announced that RON95, diesel and LPG would be exempted from GST effective April 2015. — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on October 27, 2014.