Only certain groups to get subsidised petrol next year

 

The government may allow the price of petrol to rise sometime between January and June next year as part of plans to cut spending and rein in a rising budget deficit.

However, targeted groups will still get subsidised petrol under a fuel subsidy management system announced under the 2010 Budget.

"The price of petrol might be fixed at the market rate, but the targeted individuals will get the subsidy. There will be no subsidy for petrol price except for the targeted groups.

"The (subsidy management) system is being developed and it will start with petrol. It will be implemented between the first and second quarter," Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah told reporters after opening the National Taxation Seminar 2009 in Kuala Lumpur yesterday.

The government wants to slash the budget deficit to about 5.6 per cent (from 7.4 per cent) of gross domestic product, said to be an ambitious target by economists, and part of efforts towards this will come from lower spending on subsidies.

The total amount of subsidies is expected to be about RM24 billion this year, according to the Ministry of Finance's Economic Report. Through the new subsidy management system, the government wants to bring this down to RM20 billion next year.

"Through this system, it will save the government a lot of money that can be spent on other productive activities," Ahmad Husni said.

On the impending goods and services tax (GST), he said that a thorough study was needed to ensure it would not burden the people.

"For example, we may not impose this tax on essential goods," he said.

The government expects to decide whether to implement it or not by the year-end.