Differential petrol prices for T15 raises more fundamental issues

A senior fellow of the Regional Economic Studies Programme, and Co-coordinator of the Malaysia Studies Programme, ISEAS – Yusof Ishak Institute pointed out that the government’s plans to impose differential petrol prices raised more fundamental issues.

“First, Malaysia should not lose sight of the underlying sustainability and climate crisis mitigation objectives of fuel subsidy rationalisation.

“Cheap fuel induces higher greenhouse gas emissions; higher prices are economically and politically challenging but must continually be a sustainable development goal,” said Lee Hwok Aun in an article entitled Targetting Malaysia’s “T15”: An Easier Way to Tax the Rich which was published on The Fulcrum yesterday.

“Second, the enforcement of differential petrol prices at the pump faces steep hurdles due to the sheer volume and generality of the subsidy.

“Whereas the diesel subsidy applies to commercial vehicles which carry a fleet card, the proposed petrol subsidy will apply to the vast majority, possibly by requiring MyKad identity cards to be scanned at the pump to retrieve income status. Besides the technical complications, the mechanism can be easily gamed by borrowing MyKads.

“Third, differentiating T15 from the rest critically hinges on comprehensive and accurate data, especially of income. The PADU (Pangkalan Data Utama) voluntary and self-reporting central database has fallen short of its goal of being the info hub for targeting subsidies.

“The Inland Revenue Board already has the most authoritative income data; the Road and Transport Department records vehicle ownership. Will the government put the people through more rounds of PADU, or utilise tax returns and vehicle registries?”

He also pointed out that Budget 2025 also highlighted Malaysia’s low tax revenue collection – at 12.6 percent of the GDP compared to other ASEAN nations such as Thailand, the Philippines and Singapore.

Lee also pointed out that the super rich in Malaysia paid lesser than their counterparts in high or middle income come countries that have a population of over 20 million people.

He also made a proposal to Anwar.

“Anwar Ibrahim wants Malaysia’s ultra-rich to pay more but has chosen a hazardously complicated mode of fuel subsidy removal for the T15. The elegantly simpler alternative of raising income taxes on the top brackets should be brought to the table.”