We keep hearing how the government has to subsidise to keep prices low for petrol, diesel and gas. But what is this subsidy? Someone please clarify - someone, in particular the economists who are justifying the government's action, please respond.
Does it mean that the government has been using taxpayers' money to subsidise the price, which should really be very much more because of the high cost of crude oil (it does not matter that we, the Malaysians, own it), and the high cost of processing and transporting the petroleum products?
As I understand it, the subsidy is really the government's concession to lower earlier-fixed tax rates on finished petroleum products so that the consumer incurs a lower expense. What this means is that the government would be collecting less tax from the sale of finished petroleum products.
By removing the 'subsidy', the tax rates are being restored, and the government can collect more tax. But with consumption going up, the net collection would still be high even with the 'subsidised' tax rate for petroleum products.
If my analysis is right, there is no subsidy.