LOPSIDED FUEL SUBSIDY

It can be resolved if government targets group, instead of vehicles

“BETTER sell your Persona and Iriz and buy a VW (Volkswagen) Jetta, VW Tiguan, Honda Civic, Honda CRV or Haval H2 that has an engine capacity of 1.5 litres and below.”

That is the lament of a Facebook friend, one among thousands of comments posted on social media in the same vein after the 2019 Budget was revealed on Friday.

The 30 sen subsidy per litre of petrol is limited to 100 litres for cars with an engine capacity of 1.5 litres and below and 40 litres for motorcycles up to 125cc.

Comments like the above flooded social media even before Finance Minister Lim Guan Eng finished his live telecast Budget speech.

The bone of contention is that the scope of the subsidy excludes affordable national car models with 1.6 litre engines, like the Persona, Waja and Iriz, while cars more than four times their prices are apparently eligible as long as the engine capacity meets the 1.5 litre limit.

On Saturday, Lim denied that luxury vehicles meeting the engine capacity limit will get the fuel subsidy. However, he did not specify how this refined segregation of vehicles will be done so the debate on social media rages on.

On the surface, the issue is of vehicles’ classification, but the real question is: why should people be classified according to the engine capacity of their car?

I personally know of a millionaire housing developer who drives a beat-up 650cc Perodua Kancil and a construction worker who drives a Proton Wira 1.6.

The millionaire will get the proposed fuel subsidy while there is no hope for the construction worker unless he buys a car with a smaller engine displacement.

The complaints are not limited to car owners. Motorcyclists also see red at the 125cc limit for bikes to be eligible for the fuel subsidy; many of them had opted for more fuel efficient and environmentally friendly models that have engines above the limit.

The government has yet to announce how the fuel subsidy programme will be carried out, but one thing for sure, it will not be a walk in the park.

At a glance, we can already see the problems that could arise if the subsidy is given out based on vehicles’ ownership.

Among them: What will happen to those who do not own the vehicle they drive or ride?; What if a person owns more than one eligible vehicle?; and, long queues at petrol stations as the subsidy recipients’ identities are verified.

It would be a mammoth task for the government to set up a new database to identify who is eligible for the fuel subsidy based on the capacity of their vehicles.

In my opinion the lopsidedness of the proposed fuel subsidy can be avoided if the government targets people rather than the vehicles. In all probability the complaints would not be as numerous if the subsidy is given to those in the low-income bracket.

And it would be easier to give out, too, because the target group is already available in the government’s database; the recipients of Bantuan Sara Hidup.

The added bonus is that there is no need to involve the petrol stations at all if the subsidy amounts are credited directly into the accounts of the recipients.

Petrol stations should not be burdened with the duty of gatekeepers to judge whether a person filling up his car with petrol should or should not be given the subsidy.

Some may argue that fuel subsidies should involve buying fuel, but actually what people do with the money saved by the subsidy is entirely up to them.

And it certainly is not related to the engine capacity of cars or motorcycles that they may, or may not have.