Giving choices for people: subsidy or cash!

I had tried to explain to Malaysians that subsidy is bad for the economy but they disagree. Their main argument is that they prefer subsidy compared to cash or BR1M. My old time friend, a retiree, want to have both. That is why I got the idea of letting people choose the type of cash incentives that citizens get.

The greatest problem with subsidy is that, foreigners also benefit from fuel subsidy, or for that matter, all form of subsidy. The best way to solve the problem was to issue coupons or in the case of fuel, all those who are given special smart cards so that we can control how much subsidy.

My friend told me that food coupons, widely used in USA and many advanced countries are too expensive to implement in Malaysia. He mentioned about the difficulty of implementing food coupons for Nestle, the biggest retailer for food products in Malaysia, if not the world.

The greatest source of excess sugar or carbohydrate is also Milo, with up to 50% sugar content, actually carbohydrate. Carbohydrate and sugar are the same. They have the same impact on diabetes and other ills caused by overeating. My friend has suffered from diabetes, so severe that he lost both kidneys and had to rely on free government medical treatment.

One major objection to cash handout in lieu of fuel subsidy was the about of the cash as implemented during Abdullah Badawi's time. I like it very much, but it was a case of too little and too late.

One major problem is that, the amount of fuel subsidy, which was RM500 was still too low to cover fuel costs. So, let us increase to RM1000, or the average cost of subsidy used for petrol for the middle income users. If they want more, why not? My total petrol cost at current prices is RM200 per month, driving a Proton Exora with a fuel consumption of 11 liter per 100 km. I travel 40 km per day to my office from KKIA to UMS.

Let us say that the government wants to subsidise 50% of the fuel cost. That means I should be getting a fuel cost of RM1,200 per year. So the cost to the government is RM1,200 for a fuel hungry car, travelling for long distances to his or her office.

Another problem with Abdullah Badawi's cash in lie of subsidy was that, only those with cars are given subsidies, so those who travel by taxi or buses are not covered. Also the impact of the cost of living will also be affected, because food deliveries and elctrical power will cost more.

But then you do not want the nation to become bankrupt, just to benefit foreigners, so you? The overall drop in living costs are due to tax payers paying for power and transportations that include foreigners or smugglers. How could honest Malaysians allow such misues of their hard earned tax money? Unfortunately, they do not care, as long as their stomach is full.

We cannot entertain such recless subsidy so we must implement selective subsidy using smart cards. Instead of restricting the subsidy to car owners, we should open it to all citizens, just like BR1M.

The argument that BR1M is political can be solved by renaming it to something else and make it a regular payment.

By right, we should make a choice of whether we want BR1M or subsidy. My friend insist on having both. No problem also. Just restrict the total amount to how much revenue the government has at that particular moment. If the price of oil goes up, more cash handout or subsidy lah. So it is fair indeed. Of course, you do not expect mega projects any more. All is up to private sectors and full paying fares from citizens of visitors.

For example, the revenue from GST was 30 billion. With a polulation of 30 million, each citizen should get RM1000. Once GST is removed, replaced by SST, the drop in revenue is only 20 billion so the remaining revenue can be collected from income tax and oil revenue.

Since 30 million includes children, let us use the number of voters as those eligible for the subsidy.
Around 15 million actually. https://en.wikipedia.org/wiki/Malaysian_general_election,_2018

So each person is entitled to RM2000 per year of fuel subsidy and BR1M. So RM1200 for fuel, RM800 for BR1M or cash. This is for  each adult, mind you, so my family should be getting RM10,000 per year. You can argue that this is too much but this is the amount of money that my family should be getting from fuel subsidy using petrol guzzling car and cash handout.

If Malaysia can afford to spend that amount currently, surely it can afford to spend this amount for every adult. Any slack can be taken by paying more taxes. I pay more taxes than this actually. Let alone in additon to tax that  my son pays.

The question is, why should Malaysian citizens impose on others, to accept fuel subsidy instead of just cash handout. We can use the same mechanism to control the amount of handout. Just like the cash handout to students. The mechanism is alread in place, although currently it is only for students.

Since many Malaysian demand to be given fuel subsidy, LET THEM HAVE FUEL SUBSIDIES, but you cannot stop the other citizens from getting cash instead of FUEL SUBSIDIES!

Again, the question will come that poor people will not get as much if they opt for fuel subsidy instead of just cash. There will be misuses of tax money that are meant for fuel instead of buying other things.

Why should you care how citizens use their tax and oil revenue? Let citizens decide equally and without any favour, if you are really honest, and do not think of you stomach only.

Of course lah, if you are rich, you cannot demand more subsidies compared to other citizens. After all, the oil revenue belongs to everyone, instead of just for the rich.

You can argue also that it is not practical because oil revenue cannot cover all the fuel subsidy.
https://themalaysianreserve.com/2018/03/07/govt-petroleum-revenue-likely-at-rm38b/
Actually can. Even more than rm30 billion.

Again, you can argue that the oil revenue is wastefully spent on just subsidy or cash for every citizens. This is nonsense, because tax is just tax. We still have other sources of tax, such as income taxes. In fact, by giving cash instead of fuel subsidy, it will generate more tax revenue, as business grows due to a large number of people spending money.

Then, another argument is that, by getting cash option, instead of fuel subsidy, there will be general inflation as more people have disposable income. Of course lah, if you want to stick to fuel subsidy in order to control prices, you are welcomed to do that, if you really want to reduce inflation.

Actually it is just an excuse because most Malaysians will spend on average on fuel costs at the same price. Instead of subsidising businesses, and lower he price of goods artifically, the real cost of goods are actually presented to citizens of Malaysia.

Even though prices of goods go up, by say, 5%, it can be covered by citizens with either direct fuel subsidy or just cash handout. So no effective inflation(effective living costs paid by citizens) to citizens, or equivalent to automatic fuel subsidy to all businesses that reduces prices by 5% (citizens living costs reduced by paying sellers).

What is the impact of choice between fuel subsidy to everyone or just cash handout to every citizen?

You will be stupid to accept fuel subsidy but it is your choice. If you want to be stupid, by all means, accept fuel subsidy, BUT YOU HAVE NO RIGHT, to stop others from accepting cash only, because the money belongs to all citizens. Remember, oil revenue ONLY. We do not use taxes revenue, not even SST.

My friend is actually a retireee. He does not travel far. His argument is that, his children travel more. And yet he insists of having fuel subsidy plus cash. Why not just ask for cash instead of subsidy, and give the extra money to his children? Strange, isn't it? Poor people demanding fuel subsidy instead of cash, where they can gain more, but unfortunately, this is the current scenario in Malaysia now.

Actually, it is well known among economists that any subsidy is only good for the rich and wasteful. The poor people, who demand fuel subsidy in much larger numbers, are the real losers. For whatever reasons, these amateur economists, want to break the natural law of economics. Many will declare that Malaysia is SPECIAL.

I am not so worried about the less benefits for the poor. It is their fault for demanding something that are not beneficial. I am more worried about the leakages to foreigners. Their excuse is that, the customs and police will be more efficient, if we can reduce corruption. In the case of neighbours, like Thailand, Brunei and Singapore, it is a good case of price promotions.

These price subsidies in the form of fuel subsidies even for foreigners only benefit certain group of businesses. The tourist industry, for example. But is it right that we sell our natural resources at a discounted price, when we can demand more revenue from our natural resources? It is just like selling our oil with a discount, instead of selling world market prices.

Oh, oil prices are different. We do not need to sell at a discount. How about industrial goods that rely on subsidised power, as a result of fuel subsidies? Becasue of lower costs of transportation and power costs, industrial goods become cheaper, so can be sold at a cheaper price. With a cheaper price, more of the goods will be sold. But at what price? It is still our hard earned tax and natural resources that we sell at a discount. We are losing big.

Malaysians, better wake up. Do not think of your stomach only.