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View all search resultsFuel subsidies morally indefensible even after price hikes
It has always been the case that the rich get more than the poor out of the government’s fuel subsidies.
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I
n the run-up to Saturday’s announcement that the price of major subsidized fuel brands would increase, the government made a compelling argument that the huge sum it was spending to keep gasoline cheap was morally indefensible because the lion’s share of the money went to people who drove cars.
Simply put, the bigger the vehicle you drive, the more of the subsidy you enjoy. Those who don’t drive at all don’t get any direct benefit, except from the use of public transportation, and those who ride motorcycles only get a fraction of what the rich enjoy.
You cannot have a more powerful argument than this in raising gasoline prices. The moral argument against this gross inequality should trump whatever political and economic arguments you can come up with in defense of keeping their prices low.
Finance Minister Sri Mulyani Indrawati disclosed that Rp 502 trillion (US$34 billion) of government money had been spent on fuel subsidies so far this year, most of it going to people who needed it least. She went public with this staggering figure as government ministers debated internally about the size of the price increase.
When announcing the price hikes, President Joko “Jokowi” Widodo said that as much as 70 percent of the subsidy for Pertalite, the most widely used type of gasoline, was going to the middle class.
The hikes did not go far enough to phase out the subsidy, and the government will have to continue pumping money in the program, and yes, the lion’s share of the money is still going to the wealthy. Nothing has changed, except the scale.
The difference today is that the government has stopped talking about it, as if the inequalities and immorality of the program have been fixed.
