The government is in the midst of further refining the BUDI95 fuel subsidy programme that could see more specific targeting towards high-income groups or ‘eating the rich,’ suggesting the T20 or T10 groups might see lower subsidies or none altogether. According to the report by the New Straits Times, Prime minister Datuk Seri Anwar Ibrahim
The government is in the midst of further refining the BUDI95 fuel subsidy programme that could see more specific targeting towards high-income groups or ‘eating the rich,’ suggesting the T20 or T10 groups might see lower subsidies or none altogether.
According to the report by the New Straits Times, Prime minister Datuk Seri Anwar Ibrahim said the proposal is being reviewed by the national economic action council’s (MTEN) crisis management task force, chaired by Tan Sri Mohd Hassan Marican.
“The proposal was tabled about a month ago by the task force chaired by Hassan. It has since been reviewed, and discussions were held on whether it should apply to the T5, T10, T15 or T20 income groups,” said Anwar.
“In principle, we agree, but we want to ensure it does not affect the upper-middle class. They are working on it, and I hope it will be finalised soon,” he detailed, explaining that the revision is to primarily determine a threshold that will not end up burdening the upper-middle group.
Previously, economists have estimated that excluding the T20 group from the BUDI95 subsidies will save the government up to RM1.5 billion a month.
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Putra Business School associate professor Ahmed Razman Abdul Latif said back in 2023 that the T20 group would not be too severely impacted if they were excluded from the BUDI95 programme.
“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 added.
Essentially, the issue is what precisely constitutes high-income or rich enough to not be affected by the removal of fuel subsidies. Where would the cut-off be?
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Back in 2023 again, the department of statistics Malaysia stated that the T20 group was determined with a monthly income higher than RM 10,959. That is not the case anymore as the figure has been revised to RM 11,819.
Once the announcement is made, it would be interesting to see the feedback from those affected as well as the impact it will carry over the economy.