Saturday, 28 July 2012

Car tax adds RM7b yearly to public coffers, says Customs D-G

July 28, 2012
High car prices owing to heavy taxation have been identified as a possible reason preventing Malaysians from being able to afford their own homes. — File pic
KUALA LUMPUR, July 28 ― The Royal Malaysian Customs director-general today came out in support of maintaining car taxes, saying it added up to RM7 billion annually to the Treasury that was used to aid development projects nationwide, as controversy rages over its proposed abolition.
 “About RM6 billion to RM7 billion are collected annually just from vehicle’s excise duty. Imagine how many schools and hospitals we can build with that amount of money,” Datuk Khazali Ahmad was reported as saying by English-language daily The Star today.

“This money is used for the country’s various sectors such as education, health and social development,” he was quoted further.

The civil servant had sought to appear impartial when commenting on Pakatan Rakyat (PR)’s electoral pledge to slash excise duties and reduce the triple-tax burden imposed on cars if it takes over Putrajaya in the upcoming general election.

But his remark suggested a leaning towards the establishment’s reasons for imposing car excise duties that result in Malaysians having to fork out hundreds of thousands in ringgit for foreign-made cars, nearly as much as — and often more than— it costs to own a home.

“That is their political opinion though and I cannot comment on it,” Khazali was reported saying.

Malaysians pay inordinately prices for cars mainly because of the protection afforded to national carmaker Proton since 1984.

Car buyers must pay import and excise duties as well as sales taxes that translate into some of the highest car prices in the region.

Excise duties, which form the bulk of car taxes, are imposed on foreign-made and local-made cars alike.
A recent income survey found that a household earning RM3,000 a month could spend up to 50 per cent of its income on maintaining a car.

A cut in car duties — which currently run as high as 105 per cent — could help stimulate the economy by boosting disposable income and reducing household debt burden, analysts have also told The Malaysian Insider.

The high taxes now have resulted in about 20 per cent of the RM581 billion total household debt in the country last year being held in cars, an asset that depreciates over time.

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