I beg to refer to your report about Govt looking to scrap diesel subsidy in stages (June 14) ascribed to the minister of domestic trade and consumer affairs, and to Deputy Prime Minister Naijb Abdul Razak's comments on the need to remove subsidies to achieve economic efficiency (as reported by TV3 on June 19).

It appears that the government is determined to remove subsidies from diesel and petrol; it wants to move from a controlled economy to a free, liberalised, laissez-faire economy which will be governed only by market forces. In other words, the government believes that too much government 'interference' is bad for economic efficiency.

As an 'economic libertarian', I agree that subsidies tend to create distortions, which prevent the economy from reaching the point of maximum social utility. But why stop at subsidies only? Why don't our leaders also look at the other side of the coin, namely taxes, since both subsidies and taxes cause distortions in the allocation of scarce resources?

Why does the government gloss over taxes? If the price of diesel has to be raised (by removing subsides), then the exorbitant road tax (and excise tax) on diesel-powered cars should also be removed or substantially reduced to reflect the true economic value. Let market forces have a free play and allow society to reap the full benefits of a true market economy if that is what the government wants.

By focusing only on subsidies, the government is exploiting consumers to the hilt. I feel quite strongly about the Ministry of Domestic Trade and Consumer Affairs and the DPM not telling the people the whole picture about economic efficiency, i.e. covering up the damaging part played by excessive government taxes (road tax, excise tax, toll, import tariff etc), and concentrating only on the subsidies that the government is dishing out.

Are the people so gullible as to swallow everything that these officials say?

Removing one cause of the distortion will only create a worse kind of new distortion; eg, the cost of owning a diesel car or pick-up 4WD truck is going to be so high that these owners will be 'wiped out' (unless the road tax or the highway tolls, or both, are removed).

Imagine the impact on the automobile industry with the removal of only subsidies unsold stocks, worthless machine tools to produce the diesel engines, etc. In Thailand, the road tax for petrol engines and diesel engines is the same, which explains why Thais are coming to Malaysia to buy diesel.

What is happening is 'patch work.' I would like to call upon the government to look at the picture in totality when changing policies, and not to repeat the hotch-potch acts of the past.