Govt Saves RM13.7 Bln From Restructuring Of Subsidies - Bernama

PUTRAJAYA, June 4 (Bernama) -- The government will be able to save RM13.7 billion a result of the restructuring of the subsidies on petrol, diesel and gas and from the levy that will be charged on independent power producers and palm oil manufacturers, said Prime Minister Datuk Seri Abdullah Ahmad Badawi.

He said the increase in the federal government's revenue as a result would be used and distributed for the food supply guarantee policy (RM4 billion), cooking oil subsidy (RM1.5 billion), subsidising import of rice for uniformity of price of the staple in Sabah and Sarawak (RM0.4 billion), subsidise flour (RM0.2 billion), bread subsidy (RM0.1 billion) and contributions towards subsidising petrol, diesel and gas (RM7.5 billion).

He said the steps taken to restructure the subsidies were efforts in the direction to ensure market prices reflected reality, improving market efficiency and to encourage Malaysians to save on energy resources.

"The commercial and industrial sectors will be more motivated to implement measures to make their operations more efficient while households will practice prudence in using energy and avoid wastage," he said when announcing the restructuring of fuel subsidies at his office here Wednesday.

He also announced an increase in the threshold for service tax for restaurant services outside hotels.

Restaurants outside hotels which have an annual turnover of more than RM500,000 have to pay service tax at the rate of five per cent.

"There has been complaints that the threshold (RM500,000) is too low and that foodstalls in rural areas also can achieve it.

"To ensure the people are not burdened by the service tax of restaurants operating outside hotels, the government has agreed to increase the tax threshold for them from RM500,000 to RM3 million," said Abdullah.

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