Topic: The gloomy light called subsidy. - page 4. (Read 691 times)

Subsidies aren't capitalistic in nature and they become a problem when the government starts subsidizes entities with a negative ROI or things that don't actually have a net benefit to the citizens. I'm generally against the government picking industries to subsidize with tax payer money unless there's a benefit to every single citizen (and of course, there's no way to determine the "winners".)

The energy sector and agriculture sector provide a net benefit to every citizen, those are acceptable. But the types of subsidies matter as I've seen government provide subsidies to green energy companies, to the tune of billions, only for those companies to go bankrupt a short few years later. And the companies that get these subsidies are often political donors. It's not necessarily corruption, but it isn't fair for the citizens to have to bear the cost of a politicians political favors either.

Subsidies are just theft!
The government is stealing you money though taxes and then they are buying your votes with subsidies.
How would a subsidy on petrol help the poor, only 6% of the population owns a car, if you want to help subsidize transportation not fuel that would end up smuggled.

The romans had a great saying, "panem et circenses" bread and circus, feed your population with cheap bread and give distractions and you will have a submissive population, same here, tax the fuck out of them in all means, do nothing for healthcare for education for your industry but give them cheap fuel and build a few stadiums for football matches and you're set.

That's sad to hear, but my situation in my country is more worse about this kind of issue about the Petrol. Because in your country they have subsidy to give from the Petrol to give to it's citizens, but in my country there's none plus the cost of the petrol is increasing fast due to inflation rate that affected the Petrol. Of course it gives a negative impact to the people especially to the people who needs petrol for their motor vehicle for their work. Imagine you working to provide for your needs and the little help the government could give were taken away? Nah one thing that first come to my mind in this kind of situations are corruption.


I think if they implement this kind of policy in the country of course there would be a substitute like giving them a job, shelter or even education. As long as those money that were taken away from the subsidy would be use wisely to improve the country. I know that they are having a hard time to determine where to focus investing their money in any country. For example in my country which is PH, they invested at skyway and new railroads since one of the major problems here is traffic. Of course due to those investment there would be a hard time to provide the subsidy for the people. Maybe if there's no corrupt officials maybe losing subsidy despite of investing to any other projects, subsidy would still exist.

Of course subsidy is good as it helps a lot of people in need, specially with the state of the market these days. However, governments should know when to cut off and just how much budget they should assign towards it. It is understandable that a lot of people are dependent on such subsidy, but it should be noted that other areas needs more attention and budget much like education and health.

I think removing the subsidy completely on essential goods like petrol is removed completely. However in my opinion government shouldn't spent the more money on subsidy than on more long term thing like education and health. The more possible way may limit the subsidy, so the government could only subsidize petrol for commercial truck that are used for distribution, and public transportation so the price of other product wouldn't be affected.

If your government remove the subsidy, it's mean they're currently not in a good financial, so they can't just cover up the primary needs to make the poor afford to buy it. However is your country charge a high tax? the government earn a lot money from tax, so it must be the rich not paying tax.

If the rich keep evading tax and the financial problem in your country is still not recovered, I would say beware of inflation and the possible banks going to bankrupt.

If the issue is bothered on smuggling, then the government should be proactive enough to stop such illicit activities as such, the entire economy shouldn't be brought to her kneels because of that.
There is no amount of direct support system that can be too effective as to reducing the effect of the subsidy removal, because prices of goods and services will automatically raise and I think the government cannot give support to every household.

Is the problem subsidy or corruption? In case you don't know many developed nations subsidy many products to help people live a good life. And these nations make the process transparent and void of corruption. You don't need to "throw away the baby with the water, you keep the baby and throw away the bathing water". My point is clear @EarnOnVictor tackle corruption and leave subsidy. If your sole reason for removing subsidy is because of corruption, then it's not good. What happens to the people that benefit from it?

If the government wants to stop subsidy because it cannot be sustained due to a fall in revenue or economic challenge, it's a better reason. Now the question you will ask yourself is that who is making the subsidy process corrupt? It is still the government. The money saved from subsidy will be shared among state governors through the Revenue Mobilisation Allocation and Fiscal Commission and most of these funds will go to private pockets. If the government makes the fuel subsidy process transparent, it will alleviate the suffering of the masses.

The problem of direct support for commodities such as fuel leads to smuggling, as someone can buy fuel at a price and try to sell it at the border at twice the price, and here it will lead to the state importing more fuel and thus more unnecessary expenses.
Direct support for individuals is much easier because you will spend a lot of money to ensure that the goods subsidy goes to the needy, while direct support you can transfer money directly to the bank accounts of individuals and through it make sure that they are in need or not, while direct support means supporting all classes, rich and poor.

Can you hear yourself, still contradicting what you wrote by yourself? Apart from the fact that you brought it out of a bundle of meanings before detaching that for the purpose of finding your contradictory meaning to it, the word "Subsidy" is meant for a purpose, and when the purpose is defeated by corruption that can't be solved or affecting the nation's purse, then it's useless. Subsidy-mixed with corruption is a burden to any country and its economy, especially when there is no progress or hope for it, it makes no sense to continue it with such an equation.

You don't subside when you don't have the muscle for it and when it is lined with corruption, subsidy is never by force, it's a privilege. Particularly when politicians are pocketing much of it and are not accountable for any reason, for whose gain is now the subsidy? To what end?

Therefore, I repeat in more simplified words in case you don't understand, a subsidy built on corruption in a bad economy is highly irresponsible and will always backfire.

You know, instead of removing the subsidies, most government should stop favoring the rich people and let them get away not paying their due diligence to the country. Also, a corrupt government will not be able to revive or heal a downed economy no matter how because they're lining their pockets with the money that was supposed to be used to fix the problems in the economy.

Corruption is not a genuine reason to stop subsidies. It is the government thet is corrupt and not the process of subsidizing these essential products. Removing subsidies is causing so much hardship and some businesses have closed down. While many people have been pushed down to abject poverty. What the government would have done was to identify these avenues of corruption and deal with them. Loopholes and financial leakages should be identified and standard financial and accountability strategies should be put in place. The painful part of it is that the funds saved from the removal of subsidies will still be looted by these corrupt government officials.

This will be a good policy if the government will sincerely use the money that will be saved from subsidy removal to invest in the country. If the saved funds will be used to build basic infrastructure that will lead to development, then it is good. But if the money will be misappropriated and stolen by corrupt government officials, subsidies should continue. In some countries, subsidized goods or services are the only benefits they get from their government.

Imagine how this sounds for a European who pays double the petrol and diesel cost since half of the price is just taxes!

It's pretty simple your country can't afford to pay the subsidies anymore, I can guess it's Nigeria??
Same thing anyhow, you can't offer subsidies if the returns are not worth it just to keep your people happy, In Venezuela, and Iran, at one point you run out of money, and then you have to face the reality that you were just wasting taxes to keep the population under control.


Subsidies can be also toxic leading to a country paying more to produce something than it would have had paid by importing something and simply paying a normal wage to the workers employed even if they won't be doing a thing
Sometimes agriculture subsidies go so high that with all the insurance and damage relief included they are over the actual price of the product.

The subsidy is good, but only with a progressive government and economy, it's a way the government gives back to the people which I believe is also the right of the people when they have a responsible government. However, the subsidy built on corruption, and also by the regressive government will certainly backfire. That is the case in Nigeria right now.

Also, the government's approach to subsidy should be dynamic depending on how progressive or regressive the economy and government finances are. If static and delayed for too long before acting, it would cause damage more than what they were intending to solve initially by it.

There are lots of things as citizens that we've enjoyed especially when it comes to essential things that government of our various countries have subsidize.
For some countries, government has helped in subsidizing food production, electricity, education,  transportation, health care services etc.
This subsidy goes ahead in reducing financial burden on the citizens.

 for some it is one way the government has helped them directly, because government gives them grants to support their businesses.
So I ask, what will happen if the government remove subsidy from some of the essential things that they helped citizens to subsidize, for example, fuel, electricity, food production, health care services etc.

Because I leave in a country, where the subsidy for PMS(petrol) has been removed, and almost immediately, the citizens are feeling the effect of the petrol subsidy removal.
The shocker this singler act has sent to the  spine of the economy of my country is second to none.
At this point, I've realised that, subsidy is one gloomy light that shouldn't be dimmed further  by any government.
Cause what other better ways can the citizens benefit from her government if subsidy is taken off from those essentials that directly touch the standard of living of the citizens.

What do you think? Is government removal of subsidy from essentials products, services at this period of economic hardship people are facing the best policy a  government can embark on in the process of building her dwindling economy?