KUALA LUMPUR (July 19): The rise in crude palm oil (CPO) and crude oil prices this year is expected to generate tax revenue of RM10 billion for the country, according to Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz. 

Speaking in Parliament on Tuesday (July 19), Tengku Zafrul revealed that the government will also receive approximately an additional RM10 billion from income tax and indirect tax as the country’s gross domestic product is expected to be stronger in the second quarter of this year. 

However, the finance minister stressed that despite the increase in revenues, the amount is still insufficient to cover over RM40 billion surge in government’s subsidy bill compared with the budgeted amount of RM31 billion.  

“The federal government’s expenditure is expected to increase significantly, compared to the estimated Budget 2022, which is RM332.1 billion. 

“This is due to an increase in subsidies and social assistance, where the total is expected to hit RM80 billion, much higher than the current RM31 billion, which was tabled in Budget 2022

“This step is taken to reduce the burden of the cost of living for Keluarga Malaysia due to rising global commodity prices,” Tengku Zafrul shared. 

He added that the government’s strategy currently is to review and evaluate the effectiveness of each subsidy programme and incentives that had been implemented so far.

He also said that the government will scrutinise additional revenue sources and savings to cover the additional subsidy requirements for the second half of the year. 

“On targeted subsidies, the government is still in the early stages to test the targeted petrol subsidy mechanism. 

“The test will be followed by a more extensive test using several other methods to ensure the feasibility of such a mechanism whether in rural or urban areas. 

“Development and testing of the targeted subsidy system is expected to require a period of three to six months before it is implemented nationwide,” Tengku Zafrul said. 

Previously, the finance minister announced that the projected consumption subsidy expenditure had reached RM77.3 billion so far this year — the highest subsidy in history ever borne by any government.

Tengku Zafrul also disclosed that fuel subsidy alone cost the government RM5 billion a month in June this year. 

For more Parliament stories, click here.