Rafizi urges Putrajaya to rethink its income-based classification for subsidies

·3-min read
Malay Mail
Malay Mail

KUALA LUMPUR, July 19 — Newly minted PKR deputy president Rafizi Ramli today urged Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz to explain which mechanism will be used to expedite subsidies when it is implemented.

In a statement, Rafizi said that while the concept of targeted subsidies currently being put forward by Zafrul is seen as more reasonable if managed well, it also carries exclusion and leakage risks with it.

“Exclusion risk refers to the probability that there is a group that should have benefitted from the subsidies that were out of the target group.

“This often happens every time cash assistance is announced when many of those of a low socioeconomic status do not receive any assistance compared to recipients who come in large cars to receive it.

“The risk of leakage has been a hot topic lately, especially in relation to subsidised cooking oil that is being smuggled to certain groups so that ordinary people find it difficult to find subsidised cooking oil supplies,” he said.

He said that this was the reason why he had been imploring Putrajaya to overcome the exclusion and leakage risks before implementing targeted subsidies.

He said that the current method of deciding the expenditure of the subsidies does not take into account the factors of living expenses in determining the economic position of a household.

“For example, a household with two income recipients (husband and wife) who are categorised as B40 (each person earning RM2,000) and have one child, living in a semi-urban area, certainly has a higher income than another household with one income recipient (husband) categorised as M40 (RM4,860), has five children and lives in a large urban area.

He added that the determination made by the Department of Statistics as to who falls into which socioeconomic group does not translate to real-life situations.

“In fact, it further prolongs the injustice of income distribution (as a result of the government’s failure to ensure a fair distribution of wages to subordinate workers) to the country’s welfare system,” he said.

With that, the former Pandan MP said that the government’s approach of using the B40, M40 and T20 income caps — which he pointed out was implemented during Datuk Seri Najib Razak’s tenure as prime minister — should be done away with completely.

Instead, he said the best way to decide the amount of subsidy given out is via a disposable income-based approach, which takes into account the income, expense cost and the liabilities of a household.

“The decision to set the eligibility criteria for the receipt of subsidies (subsidised gasoline, cash assistance, food subsidies and others) is a national decision that needs to be debated and peeled so that it is accepted by the people as a whole, rather than the decision of some officials in the meeting room.

“I am of the view that we need to abolish the approach of using the B40, M40 and T20 income caps, instead introducing a disposable income-based approach taking into account income, expenses costs and total liabilities per household,” he said.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting