Malaysia to revamp gasoline subsidies and raise taxes in a bid to narrow deficit

abcnews.go.com:

Malaysia will introduce new taxes and revamp gasoline, education and healthcare subsidies next year as part of aggressive reforms to narrow the country's fiscal deficit

KUALA LUMPUR, Malaysia — Malaysia will introduce new taxes and revamp gasoline, education and healthcare subsidies next year as part of aggressive reforms to narrow the country's fiscal deficit, Prime Minister Anwar Ibrahim said Friday as he unveiled a national budget for 2025.

Anwar told Parliament that Malaysia spends some 80 billion ringgit ($18 billion) annually on subsidies, grants and financial aids, of which a quarter is used to subsidize the widely-used RON95 gasoline. But the government's tax revenues are low at under 13% of GDP, he said.

“We have blanket subsidies on fuel, electricity, water, education and health services and even basic goods such as chicken," he said. “Such an approach is not feasible when the country is burdened with high debts and a low revenue base.”

“Next year’s fiscal reform will be more aggressive with the progressive expansion of tax revenues and subsidies targeted for those most in need," he added.

The subsidy restructuring is part of economic reforms pledged by Anwar, who took power in 2022, to save the country billions of dollars annually, correct imbalances and build a more sustainable economy. Malaysia has implemented targeted subsidies for diesel and electricity, adjusted water tariffs and removed subsidies for chicken this year.

Anwar said targeted subsidies for gasoline will be implemented from mid-2025 and will save 8 billion ringgit ($1.9 billion) annually as foreigners and the super-wealthy will no longer be able to enjoy them. While full details were not released, Anwar said the majority of Malaysians will