Malaysians Got a Fuel Subsidy ’til Now. Now What?
|November 30, 2013||Posted by Staff under Subsidies & Waste & Public Debt|
Malaysia has cut fuel subsidies for the first time in more than two years. The government spent 24bn ringgit on fuel subsidies last year, which contributed to a widening budget deficit. The high budget deficit was one of the factors that lowered Malaysia’s credit rating from stable to negative.
The change also comes at a time when Asia’s emerging economies have been hit by investors pulling their money out. The pull-out has been triggered by speculation that the US central bank will soon begin to cut back on the amount of money it is pumping into the economy.
Malaysia, which has seen its currency, the ringgit, decline by nearly 10% against the US dollar since May.
Ed. Notes: It was to help the people, some of whom are poor, that the government of Malaysia — a place of lots of sun and oil where even a little poverty makes no sense — first put those subsidies in place. Having taken them out, now what will the government do for anyone needy? One huge help would not be to not fund programs like cheap fuel from taxes on people’s income and spending but instead to fund a dividend, that people could spend on anything, funded from taxes, fees, and dues on the value of land and resources.
A system of charges-plus-dividends would redirect the society’s spending for nature from the pockets of absentee owners, speculators, and lenders, into the pockets of everyone. Most people would be better off having to pay Land Dues while getting back “Rent” Dividends. And those wealthy few whose Land Dues would exceed their Rent Dividends, they could be compensated by an end to taxes on enterprise. They could earn income not by collecting tolls from others for the use of nature but by actually growing the economic pie, by investing in more efficient capital goods and in a better educated labor force.
Getting their share of the nation’s land rent, each citizen could spend their dividend however they saw fit, whether on fuel or not. Some will spend it on alternative transportation, which would stimulate that sector of the economy plus improve their environment. And, getting a dividend while not having to pay taxes on their wages and purchases, the poor could lift themselves up out of poverty, into a growing middle class, rather than simply lose a handout as now.