Saturday, March 11, 2006

Dear Prime Minister

Contrary to popular opinion, I support your Cabinet decision to raise the price of petrol and diesel. If I were in your position, and have influence in making the decision, I would lobby for complete removal of petrol and diesel subsidy.
Removing subsidy is like imposing tax to the affected group, in this case the affected group is 95% (or thereabout) of the country. The effect of this is like imposing consumption tax, some people pay more, and some people pay less, depending on their consumption of the product. If we calculate the amount petrol consumed as a percentage of income, the lower income group has the highest increase, even though the higher income group has the highest amount of petrol consumed.

May I suggest these measures to help the lower income group?

Minimum wage legislation.
This might take up to six month to study, write and put it through the parliament and passed into law.
This will spur the country forward to make more capital investment and increase per capita productivity, since employers would not employ employees to do low value jobs. It will also help employees on low income; higher income will ease their burden.

Social welfare payment (dole).
Social welfare payment for the poor, disabled old folks and pensioners, since their income are normally low and most of them cannot make end meet. Those people who are unemployed and have children to feed should also be included in this category. I would not elaborate further on this, since this should be included in our caring society concept adopted some time ago.

May I also suggest that the social welfare payment for main urban areas be set at RM1200 for two person household, (single person rate could be set at RM600) with increasing amount depending on the number of dependent in the household, e.g. RM100 for every additional child under 15 years old.
As for the minimum wage rate, I would suggest the rate is set at RM1200 for 48 hour week. That gives hourly rate of about RM5.70.

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