T20 fuel subsidy debate exposes gap between income labels and real living costs

Malaysians say the proposed fuel subsidy cuts for T20 households fail to reflect the realities of urban living and rising expenses.

KUALA LUMPUR: Freelance beauty consultant Christina Lim laughed when asked about the government’s proposal to refine fuel subsidies by limiting benefits for higher-income households classified under the T20 category.

“It looks like I’ll have to chase my two working children out of the house so they can afford to put petrol in their cars,” she said.

Lim was referring to Prime Minister Datuk Seri Anwar Ibrahim’s recent remarks that the government could reduce or remove fuel subsidies for the T15 and T20 groups.

Earlier yesterday, Majlis Amanah Rakyat (Mara) chairman Datuk Dr Asyraf Wajdi Dusuki said the definition of the T20 category should be applied carefully, as income classifications often fail to reflect a household’s real financial pressures and responsibilities. He added that a household income of RM13,000 in cities such as Kuala Lumpur could effectively place a family closer to the M40 or even B40 category because of living costs. Several DAP leaders also voiced their concerns.

Lim agreed, arguing that the government’s current classification system does not accurately reflect household realities.

“From what I understand, the government places those earning close to RM12,000 in the T20 bracket. But it also combines household income. How does that make sense?” she asked.

“I earn about RM4,000 a month, while my husband earns around RM9,000 as a marketing manager. My two eldest sons have only just started working and earn about RM3,000 each.

“Together, that is nearly RM20,000, which under current classifications puts us in the T10 category. Is that logical?”

Lim said the government should instead calculate income based on the number of wage earners within a household.

“If each of us earns RM12,000 individually, then by all means classify us as T20,” she said.

“But if four people are earning a combined RM20,000, it averages out to only RM5,000 each, which means we are actually closer to the B40 category.

“It also doesn’t make sense to look only at income figures without considering people’s expenses.”

She said her children still needed cars because public transport was impractical, while she and her husband continued driving their younger children around.

Lim offered two suggestions.

“Firstly, base the calculations on the number of income earners in a household,” she said.

“The other option, which may not be popular but could be a win-win, is for the government to raise the subsidised petrol price to RM2.50. But if you tarik (remove) subsidy, die lah.”

The proposed subsidy rationalisation has triggered mixed political reactions.

DAP national publicity secretary Yeo Bee Yin, Kepong MP Lim Lip Eng and Klang MP V. Ganabatirau opposed the proposal, while PKR’s Pasir Gudang MP Hassan Karim expressed support.

Last week, economist Professor Dr Ahmed Razman Abdul Latiff from Putra Business School said the government could save RM1.5 billion a month if the BUDI95 subsidy scheme were limited to the B40 and M40 groups.

An engineer who only wanted to be known as Hernan shared similar concerns.

“I may have to buy an electric bicycle soon just to move around,” said Hernan, who is married with two children.

“I already own a truck that runs on diesel. A full tank costs about RM500, so I have stopped using it. If we have to pay market price for petrol, we could end up spending close to RM1,000 a month on fuel.”

Hernan said his daughter and son-in-law also lived with the family, pushing their combined household income beyond the T20 threshold.

“We don’t drive luxury cars or live in bungalows. We are just scraping by every month,” he said.

“Asking my daughter and son-in-law to move out would reclassify our household, but then they would face the burden of renting a home and managing additional expenses.”

He said such policies merely shifted financial pressure elsewhere instead of solving the problem. Hernan also warned that higher fuel prices would eventually push up the cost of goods and services.

“Perhaps policymakers should start looking at net disposable income – after taxes, housing and childcare costs – to better reflect actual wealth in expensive urban centres,” he said.