Wealthier Malaysians gripe as Anwar’s ‘pro-poor’ budget hits them in the pocket

Petrol subsidy cuts for richer drivers and tax hikes to fund wage increase for low earners draw ire

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Malaysia’s move to narrow the government’s fiscal deficit could trigger a surge in inflation. Photo: Reuters

Published: 1:00pm, 24 Oct 2024

Anger has rippled out across Malaysia’s pinched middle classes who say they are being penalised to pay for Prime Minister Anwar Ibrahim’s bold budget pledge to lift incomes of the poorest and pare down national debt.

Anwar unveiled the country’s largest-ever budget last week, setting aside 421 billion ringgit (US$99.8 billion) for 2025 to “raise the floor” for the country’s lowest income earners and “raise the ceiling” for Malaysia’s economic growth.

But cuts to petrol subsidies for richer drivers and tax hikes to pay for a wage increase for low earners have been met with anger and anxiety by many Malaysians, specifically among those who barely qualify as the top 15 per cent of income earners – or T15 group.

Households earning a combined monthly income of 13,295 ringgit (US$3,150) are classified by Malaysian authorities as “T15” – a group which then includes the highest earners, better equipped to digest price hikes and loss of subsidies.

“You should remove subsidies and raise taxes on those who earn over 50k a month,” read a Facebook comment by user Amirul Zamir. “You can’t place the same bracket on people who earn 20k with those earning 200k a month.”

The government estimates it will save about 8 billion ringgit by cutting out the T15 when petrol subsidy reforms kick in by mid-2025. Anwar pledged to maintain a 12 billion ringgit spend to subsidise the remaining 85 per cent of drivers nationwide.