The Government just announced that
excise duties on cars will remain, dashing hopes of any reduction in car
prices. Excise duties generated RM7.09 billion in 2012. Together with other
forms of taxes, the Federal Government collects RM11.14 billion in 2012 from
the car industry.
This RM11.14 billion is equivalent to
48% of personal income taxes, 22% of corporate taxes and 33% of petroleum
taxes. For 2013, this revenue source is likely to be higher. The Edge Malaysia
carried a thorough report and analysis of the Malaysian automobile industry in
the January 6, 2014 issue.
At a time when fiscal restraint is critical
to rein in the budget deficit, to counter possible credit rating downgrades and
capital outflows, this revenue source is proving too hard to let go.
In the same announcement, the
Government has deferred any decision on removing the approved permits (APs)
system for importing cars into Malaysia.
In a system where a few individuals
can make huge amounts of money by simply being granted the rights to bring in
cars, this easy money is too hard to let go. For the interest of making a few
rich elites richer, the rest of the population continue to suffer high car
prices.
Here is an idea. Remove the excise
duties and the Government owns all the APs. Profits from the APs now become
Government revenue, replacing the excise duties. And removing the excise duties
lowers the price for cars. So, why not?