Pakatan Rakyat will propose a "radical solution" to greatly reduce the tax burden imposed on Malaysians under the National Automotive Policy (NAP).

opposition boycott batu talam election pc 110107 azmin ali PKR deputy president Azmin Ali ( right ) said the proposal will be tabled during the Pakatan Economic Summit, scheduled to be held next month.

He said the proposal aims to greatly reduce the burden of triple taxation currently imposed on car buyers, effectively decreasing the disposable income available to Malaysians.

Azmin stressed that the BN government has been charging up to three types of tax on each car bought in Malaysia - import duty, excise duty and sales tax - and that this has pushed up the price of cars by at least 70 percent.

He pointed out that hire-purchase loans for passenger cars account for some RM118 billion worth of household debt, based on Bank Negara statistics.

"A close estimate is that at least 70 percent of (the) RM118 billion in loans borne by Malaysians (arises from) the high taxes," he told a press conference today at the PKR headquarters in Petaling Jaya.

Azmin noted that the 70 percent minimum tax, which covers 60 percent excise duty and 10 percent sales tax, only applies to cars below 1,500cc and built locally.

Imported vehicles are taxed at least an additional 30 percent import tax, pushing the tax to between 100 to 145 percent of the base price depending on build.

“This means for the smallest Perodua car sold at RM40,000 to a Malaysian, he has to pay a tax of RM16,500 to the government.

“It is an insult to the public that Malaysians have to take loans to pay taxes to the government, when commercial vehicles are exempted from the high excise duty - proof that Umno/BN has always put the interest of the businesses at its core of its economic policies (first).”

Exorbitant household debt

Azmin stressed that the country faces a frightening household debt situation, with Bank Negara statistics showing that Malaysian households collectively owe RM577 billion in debt as at November last year, equivalent to 74 percent of the national gross domestic product.

Apart from debts incurred through passenger car loans, Malaysians also owe RM22 billion in personal loans and RM225 billion in housing loans.

credit card swipe 070605 The debt situation is compounded by sky-high credit card debts - estimated to be in the region of RM200 billion - which Azmin said indicates that the public are financing their basic household expenditure using credit cards.

“The figures when put together point to a bleak scenario at the macro-economic level and the public’s ability to enjoy a better quality of life, especially when income level has not risen over the years. The World Bank reported that salary increments in Malaysia only went up by 2.4 percent.

“A 74 percent household debt-to-GDP ratio is worrying when ( sic ) government borrowing is also registering (a) record high, surpassing the 50 percent mark (public debt-to-GDP ratio) for the first time in our history.”

He explained that their plan aims to restructure the current tax system, especially under the NAP, to take the burden off consumers while giving them greater access to disposable income to improve their living standards.

“At the moment, Malaysians do not have the capacity to spend as every sen earned goes to paying their loans. To spur the economy, the people need to have the capacity to spend,” he said.

Proposal in the works

Azmin said however that their proposal to push a “radical shift” in government policies on vehicle prices and affordable housing is still in the preliminary stages, but expects to finish their research in time for the summit scheduled for late March.

“PKR will convene a series of consultation processes with experts and consumer groups to find a radical solution to these national problems that have been victimising the public for a long time.

“The feedback and demands of the public shall be incorporated into our economic policies to be jointly unveiled at the Pakatan Economic Summit. Umno and BN owe a big apology and explanation to the public for imposing such a high financial burden on the public all this while,” he said.

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