KUALA LUMPUR, Nov 6 – Despite falling global crude fuel prices, Putrajaya sees no reason to adjust pump prices now as it is still subsidising RON95 petrol and diesel. In response to calls by several opposition leaders to lower pump prices as crude oil prices had fallen to US$80 (RM270) per barrel, deputy finance minister Datuk Ahmad Maslan said the matter “does not arise”.
This is because Putrajaya is still forking out 12 sen per litre in subsidy. He, however, said this was a far cry from last year when the federal government paid 74 sen per litre in subsidy. “If the prices continue to drop, we have two options, namely to reduce pump prices – which is a popular move – or to start charging sales tax,” he said when winding up the Budget 2015 debate today.
He said in the event fuel tax is implemented, it will only be until end of March next year as the Goods and Services Tax (GST) will be rolled out on April 1. Putrajaya had announced that RON95 petrol, diesel and liquid petroleum gas (LPG) are among a slew of products and services exempted from the broad-based consumption tax.
Yesterday, Rafizi Ramli (PKR-Pandan) warned that Malaysians may end up subsidising Putrajaya if it continues to maintain current pump prices. “If the fuel price goes down to below US$73 a barrel, the federal government will not need to pay any petrol and diesel subsidies,” he said at a press conference at the parliament lobby today.
“The government will have to rewrite the script on how subsidies caused financial strain to fiscal spending because it would not be valid anymore.” The government had been slashing fuel subsidies as part of its rationalisation plan to consolidate its fiscal performance. In early October, it made a further cut to subsidies which saw motorists paying 20 sen more a litre for RON95 petrol and diesel.
RON95 now costs RM2.30 a litre, up from RM2.10, while diesel is at RM2.20, an increase from RM2 previously. On another matter, Ahmad Maslan denied claims that Putrajaya was “lying” about its budget deficit, which is targeted to reduce to 3.5% this year. “We didn’t lie about the figures, why do we want to do so? Just because you think it is so does not mean it is true,” he told Tony Pua (DAP-Petaling Jaya Utara) who had earlier asked why big ticket projects like the RM23 billion Mass Rail Transit (MRT) and RM12 billion Light Rail Transit (LRT) projects were not included in the Budget.
“I’ve said it, the deficit is 3.5%. Our officers have done their calculations and there is no reason for us to lie to the people,” he said. Later at the parliament lobby, Pua said that Putrajaya’s budget deficit did not reflect the reality of its spending and debt as many of the government’s expenditures were no longer parked under its budget. “Many major projects such as the construction of police stations as well as the LRT and MRT are not in it. All these are taken out to hide the real deficit,” he said.