The transport ministry is reviewing a proposal for the reduction of road tax for diesel vehicles in Malaysia in order to reduce the financial burden on users while safeguarding revenue, New Straits Times has reported.
The proposal is being reviewed by the transport ministry, said transport minister Anthony Loke, but he stressed the need for a balanced approach, noting that some owners of diesel vehicles already benefited from targeted fuel subsidies.
“We must strike a balance, as not all diesel-powered vehicles are ineligible for subsidies, with some already benefitting from targeted or subsidised pricing. We need to assess how best to support those who do not receive subsidies, possibly through a reduction in road tax,” Loke said.
At the same time, any reduction in road tax for diesel vehicles will have implications on government revenue, so the proposal must be carefully considered, the transport minister continued.
Earlier this week, prime minister Datuk Seri Anwar Ibrahim said that the Malaysian government is considering the reduction of road tax for diesel vehicles to mitigate the impact of increasing fuel costs.
The prime minister said that lowering fuel prices was not viable at present because fuel subsidies present a heavy fiscal burden, which costs the government around RM7 billion a month, and said that the government would maintain its targeted subsidy approach for RON 95 petrol, saying that Malaysia’s fuel prices are relatively low compared to many oil-producing countries.
Earlier this month, the Malaysian Institute of Economic Research (MIER) has proposed that RON 95 petrol subsidies be gradually reduced and the savings redirected to diesel subsidies to help businesses.
Another prior report stated that the government is studying the possibility of using the MyKad mechanism for a targeted subsidy system for diesel fuel, as presently used in Budi Madani RON 95 scheme for subsidised RON 95 petrol.
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