KUALA LUMPUR, Oct 13 — The government’s purported plan to free first-time carbuyers of excise duties for small cars goes against its policy to encourage public transport use, DAP MPs said.
Serdang MP Dr Ong Kian Ming said that the government should instead reduce excise duties gradually through a long-term policy if it wanted to make cars cheaper for Malaysians.
“This kind of one-off measure is not only irresponsible but also sends a wrong signal for a government that is trying to increase the usage of public transportation,” he told Malay Mail Online when contacted.
Ong was commenting on a recent news report by Sin Chew Daily, which claimed that the government may exempt young first-time buyers from paying excise duties for both local and imported small car models that are assembled in Malaysia with expected savings up to RM2,000. The Chinese paper said the announcement may be made in the tabling of Budget 2017.
Ong however said this “may not be a wise policy to introduce at this point in time when household debt is already at an all-time high”, also indicating that it was unlikely to increase consumer spending.
“Will first time carbuyers be saddled with additional loans which they may not be able to service? The difference of RM2,000 may not be significant enough to address the underlying problem of low wages, which prevents many people from being able to afford cars,” the Serdang MP said.
“This policy will not boost spending significantly, since it is a one off discount that may just result in a small reduction in the monthly instalment which has to be paid rather than putting money directly into the pockets of consumers,” he added.
Another DAP MP, Liew Chin Tong, believes that such a policy would not have much impact either on the economy or on traffic conditions, as the savings for excise duties exemption for small cars “would not be huge”.
“I think it is a lousy policy that won’t generate much demand. It contradicts the policy of encouraging public transport use, but my point is I don’t think that many people would buy cars just because of the exemption,” the Kluang MP told Malay Mail Online.
When asked to verify if the government will be exempting first-time carbuyers from excise duties and if it will be announced in Budget 2017, Minister of International Trade and Industry Datuk Seri Mustapa Mohamed did not confirm the matter.
“As you know, anything to be announced in the Budget will be made beginning 4pm 21st Oct by PM as Finance Minister, in the Dewan Rakyat,” he said in a brief text reply to Malay Mail Online.
Malaysians have to pay hefty taxes when buying cars, which would include excise duties ranging from 75 per cent to 105 per cent depending on the engine capacity and sales tax of 10 per cent. Depending on the country of origin, there could also be an import duty of 10 per cent for locally-assembled cars or 30 per cent for cars assembled abroad.
When unveiling the National Automotive Policy (NAP) 2014, Mustapa had said then that the government will not slash excise duties for vehicles, pointing out excise duties amount to 75 per cent of the government’s total tax collection for vehicles.
He had said then that the government is open to gradually cutting the excise tax on cars if the country’s financial situation improves.
