In dismissing the perception that only the B40 income earners had been favoured, the ministry’s secretary-general Johan Mahmood Merican pointed out that maintaining targeted electricity and fuel subsidies was a pro-middle-class move given that M40 households typically use more electricity and fuel than those in the lower-income group.
Some, like economist Geoffrey Williams, had previously shared the view that the latest budget offered “little” to those in the M40 or middle-income group, attributing it to “stagnant cash-aid allocations and the ineffectiveness of raising minimum wage”.
Johan was commenting on assertions that Putrajaya had intentionally not adopted the “orthodox” view held by others such as the World Bank that governments should remove subsidies and provide direct cash aid instead.
“Imagine if we do what the World Bank advises — that we put everything at market price and then give cash assistance to everyone. But we all know that when it comes to electricity and fuel, the middle class consumes a lot more,” he said.
“When you have something like Budi95, which allows Malaysians to continue buying petrol at a subsidised price of RM1.99, it’s actually more pro-middle class than pro-B40, because they’re effectively getting a bigger slice of the subsidy.”
He said the budget also refines tax reliefs mainly enjoyed by the middle class because they are the ones who pay the most in personal income tax.
This year’s measures include extending childcare benefits from six to 12 years, a higher relief for children with autism or Down Syndrome (from RM4,000 to RM10,000), RM1,000 in domestic-tourism relief and widened stamp duty exemptions for homebuyers.
“These are all (benefits) mainly enjoyed by the middle-classes. So actually, sometimes I feel like (the budget) is unfairly branded as being just for the B40. Certainly, subsidies and tax reliefs are how the middle-class benefits a lot more than the B40.”
On the cost-of-living, Johan said while headline inflation remains modest by international standards, food and dining-out costs had outpaced other categories and this meant that price pressures were felt more acutely.
However, the government has also introduced policies such as Sara (targeted essential goods assistance) and Jualan Rahmah to address these issues.