A MINISTER says those who drive BMWs should not enjoy the same fuel subsidies as those driving Kancils. Those with the German car are rich, he claims.

       But are they, really? And are all Kancil users poor?

       That may be true if a general comparison is made between the owner of a brand new BMW and the owner of a second-hand Kancil.

       However, there are also those who drive older BMWs, which may cost about as much as any other “poor man’s” car.

       Thus, the outcry over International Trade and Industry Minister Datuk Seri Azmin Ali’s argument that BMW owners should not get the subsidy that Kancil owners get is understandable.

       Azmin made the comparison when talking about a possible new targeted fuel subsidy scheme but that is another thing he might also want to ponder about.

       The rich – like the BMW owners he generalised – might also deserve some “benefits”. After all, the T20 and, even more so, the M40, are the largest payers of personal taxes in the country.

       In a country where the tax base is incredibly narrow, maybe the tax-paying “BMW owner” should deserve some aid from the government.

       Coming back to the grounds of gripe, Sunway University economics professor Yeah Kim Leng said the BMW analogy was correct if it was intended to convey the equity principle that those who consume more, should pay more taxes, which is also similar to the GST system.

       However, Yeah thinks it’s incorrect to assume that all BMW drivers, including those driving old models, are rich.

       “Those in the M40 income group can still afford a BMW, depending on spending priorities and lifestyle choices.

       “Likewise, some B40 individuals may decide on an old Bimmer for occasional or everyday use,” he said.

       Given the ongoing uncertainties over spiking global crude oil prices, Yeah said it was crucial for Putrajaya to come up with a new mechanism on petrol subsidies as soon as possible.

       “The earlier the current general fuel subsidy is restructured, the more subsidy savings the government will have,” he added.

       Yeah also regarded the fuel subsidy mechanism now as a “burden” on the country.

       “Reducing it will not only strengthen the government’s fiscal position, but importantly lead to a more sustainable use of the country’s oil resources, and more productive use of government revenue,” he said.MCA spokesman Mike Chong said Azmin’s “BMW and Kancil” analogy was incorrect, as driving a luxury car does not necessarily make a person part of the T20 high-income group.

       “That is why we have to look at household incomes. If the person is truly B40, then he should be given full subsidy,” said Chong.

       As global crude oil prices continue to spike, Chong said it was important to rethink the fuel subsidy mechanism.

       “Of course we cannot do away with the subsidy as the B40 and M40 will suffer.

       “However, a person in the T20 shouldn’t be enjoying the same subsidy,” said Chong.

       There have been suggestions of using income tax files linked to a person’s IC number as proof of income.

       Then, there is also one that links the capacity of a car’s engine with the subsidy mechanism. But what’s to stop a rich man from buying both a BMW and Kancil and use the latter to fill up?

       Selangor Barisan Nasional chief Isham Jalil said that more than a decade ago, Barisan had a similar idea of a tiered-subsidy mechanism that would take into account a person’s income.

       “The savings from the subsidy rationalisation can be channelled to the B40 group via cash transfer programmes,” said Isham, referring to the former Bantuan Rakyat 1Malaysia (BR1M) programme.

       However, after Barisan fell in May 2018, BR1M was scrapped and the cash transfer programme was reduced after GST was replaced with the SST.

       “After the GST was annulled, Putrajaya had a RM20bil-30bil hole in its budget each year. That is why the subsidy savings can no longer be redistributed through cash transfer programmes,” said Isham.

       He also warned that if fuel subsidies were removed without any aid channelled to the needy, it could lead to public anger.

       “Prices will definitely increase due to cost push, but demand will not, due to income stagnation or even reduction. In this case, many people will stop buying and entrepreneurs will just stop producing,” added Isham.

       Isham, who penned a column about fuel subsidies in 2017, advised Putrajaya to implement a programme similar to BR1M, where not just the lower income group will be aided, but also SMEs across the country.

       “Aid to small businesses is very important,” added Isham.

       Last month, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said Malaysia is expected to fork out as much as RM71bil in total subsidies for 2022, with petrol subsidies alone touching RM30bil. That is an astronomical amount in terms of subsidies. Zafrul said that for every RM1 of fuel subsidy, 53 sen goes to the T20 group, while 15 sen is used by the B40.PKR treasurer Lee Chean Chung, however, said the government had to be transparent about its plans to introduce a new fuel subsidy mechanism to ensure the lower income group was not affected.

       “Is this a concrete suggestion from Azmin? I don’t think so,” added Lee.

       For a targeted fuel subsidy mechanism to be effective, Lee said it was crucial to have big data analytics on the household/income transfer.

       “The rakyat would not mind if the subsidy is channelled to the right group, as it is the most effective way to help the poor.

       “But tell us the details. Be transparent,” said Lee.

       Putrajaya is now on a road fraught with speedbumps in its bid to steer the country out of economic problems. Big car or small, we need some good driving.