02/10/2025

THURSDAY | OCT 2, 2025

/thesuntelegram FOLLOW / Malaysian Paper

ON TELEGRAM m RAM

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BUDGET 2026 WISH LIST

Economists weigh benefits of new taxes in Budget 2026

Sarawak villagers bemoan exclusion from fuel subsidy

Ű BY JOSEPH PETER newsdesk@thesundaily.com

KUCHING: Villagers in Sarawak who rely on boats instead of cars say they are unfairly left out of the RM1.99 per litre RON95 subsidy, sparking growing frustration across the state. Without Road Transport Department driving licences, which are required to qualify for the lower rate, rural residents who depend on riverboats and fishing vessels must pay the higher market price of RM2.60. Many have travelled long distances to plead for help at service centres run by politicians and government agencies. On Sibu community social media pages alone, more than 3,800 comments poured in yesterday as residents vented their anger. “It is so pitiful that we villagers cannot buy petrol at the cheaper price. We even come to Sibu town but nobody can help us,” said Juk Ngau, who travelled from Kapit. Juk owns a speedboat but has no driving licence as riverboats do not need to be registered with the department. Villager Julia Wan pointed out that town residents enjoy the subsidy with their MyKad and driving licence. “Why did the politicians not look into these issues earlier?” she asked. Sarawak Transport Minister Datuk Lee Kim Shin said the state is in talks with Putrajaya to ensure boat and fishing vessel owners also qualify for the cheaper fuel. The Domestic Trade and Cost of Living Ministry has despatched senior officials to Kuching to investigate the problem. Led by its senior assistant director Noriqram Mohd Noor, the delegation has been meeting transport groups, fishermen’s associations, farmers, riverboat operators and other stakeholders. Noriqram admitted that the new pricing rollout has “grey areas” in Sarawak. “The logistics and geographical setup in Sarawak is very different from Peninsular Malaysia. We are preparing a report to the Finance Ministry to find solutions as soon as possible,” he said. He added that thousands of coastal and riverine fishermen rely on RON95 but lack driving licences. Cargo operators moving essentials into the interior also face shortages, with limited petrol stations and many rural outlets run by small operators with restricted fuel quotas. Sarawak has about one million rural residents across 6,000 longhouses, many of whom own boats and chainsaws for daily farm work. Without changes, they risk losing out on the subsidy and paying RM2.60 instead of RM1.99. Senator Abun Sui Anyit of Belaga, who first raised the alarm, said he has highlighted the matter in Parliament, urging intervention. Nonetheless, he estimated that total savings from subsidy rationalisation across petrol, electricity and other sectors could reach RM17 billion, with another RM10 billion expected from higher SST collections. “These savings could be redirected to health, education and social protection. But there are signs that this money may just go into operational expenditure,” he warned. Williams stressed that Malaysia’s fiscal position is sound and the government’s next step must be to lift household incomes. “Anything else is a distraction from the core aim of improving the standard of living for the rakyat ,” he said. – BY T.C. KHOR

to price shocks. The agricultural sector must be modernised,” he said. Yugendran admitted that new taxes may eventually be unavoidable. “Taxes always hurt the people, but in the long run we may have no choice if we want to grow the country. Still, I sympathise with the rakyat ,” he said. He noted that Malaysia could no longer rely on petroleum as its fiscal backbone. “In the 1990s and early 2000s, oil and gas made up between 30% and 40% of government revenue. Today it is less than 20%. As Malaysia grows, the government must increasingly look to private industries that drive most of our income,” he said. For Williams, the priority should not be raising taxes but creating conditions for income growth. He argued that keeping Malaysia as a low-tax economy would strengthen its position regionally while allowing businesses and households to thrive. Both economists agreed that Budget 2026 must walk a tightrope between fiscal discipline and economic resilience, but they remained firmly opposed on whether new taxes should form part of the equation.

A 1% levy could raise up to RM28.8 billion annually while a smaller 0.25% charge would still yield RM7.2 billion. “Introducing an EPT would create a more resilient, broad-based, equitable taxation system with low impact on consumers and businesses,” he said. But economist T.K.S. Yugendran of Bait Al-Amanah rejected the idea outright, calling it damaging to Malaysia’s digital push. “I think it is a terrible idea. E-payments already make taxation easier and curb evasion. Tax them, and people would revert to cash, which is harder to monitor and could even fuel money laundering,” he said. Instead, he expects Putrajaya to adopt a “conservative but expansionary” stance in Budget 2026, one that balances fiscal discipline with support for growth. “The government is likely to take a cautious approach but still expand spending where needed to sustain industries,” he said, pointing to risks such as global trade tensions triggered by US tariff policies. He added that public spending should be directed at strengthening fundamentals. “Putrajaya should focus on food security. Our dependence on imports leaves us exposed

o Govt urged to avoid measures that could undermine economic agility

Ű BY T.C. KHOR newsdesk@thesundaily.com

PETALING JAYA: With Budget 2026 just days away, economists are divided on whether Malaysia should introduce new taxes to raise revenue or hold the line to protect competitiveness and growth. Economist Dr Geoffrey Williams said Malaysia’s fiscal position remains sound and urged the government to avoid measures that could undermine economic agility. “Malaysia should aim to be a low-tax country to boost competitiveness regionally. So, no new taxes, greater efficiency and focus on competitiveness, innovation, liberal markets and economic agility is best.” He added that if new revenue is unavoidable, an e-payments tax (EPT) would be the most effective option.

Yugendran stressed that public spending should be directed at strengthening fundamentals. – ADAM AMIR HAMZAH/THESUN

‘Govt must prioritise raising household incomes’ PETALING JAYA: Budget 2026 must prioritise raising household incomes instead of funnelling money into special projects, said economist Dr Geoffrey Williams. The founder of Williams Business spending, help SMEs, and push investment and growth.” He said Sumbangan Asas Rahmah could be redesigned for greater long-term impact.

On the topic of “sin taxes”, he cautioned against further increases. “Alcohol taxes are already very high and tobacco taxes, although sometimes justified for health reasons, do not generate much revenue and encourage smuggling.” He questioned the fiscal benefits of petrol subsidy rationalisation, saying it is not well targeted to protect vulnerable groups. “The saving is projected to be as little as RM2.5 billion, compared with the RM8 billion previously announced. It is also not targeted at protecting vulnerable groups because it is available to everyone for purchases under 300 litres per month,” he said.

“For an additional RM11.4 billion, it could be expanded into a UBI providing RM100 per month to 22 million people.” Williams downplayed the likelihood of sweeping tax changes in Budget 2026, noting that the recent sales and service tax (SST) hike has already taken effect while the high-value goods tax was withdrawn. He said an e-payments tax (EPT) remains a potential option, describing it as a “low-rate levy with minimal impact”.

Consultancy said Putrajaya’s fiscal strategy should focus on measures that directly improve living standards, such as converting Sumbangan Asas Rahmah into a monthly scheme or expanding it into a universal basic income (UBI). “The government should forget special projects, such as the green economy and artificial intelligence, and leave those to the market. To stimulate the economy, they need to raise incomes, which in turn would raise