Do you know that hire-purchase loans allegedly account for about RM118 billion total worth of Malaysian household debt? This was revealed by PKR deputy president Azmin Ali at a press conference today, and PKR estimates that of this RM118 billion, about 70% are actually the high excise taxes, import taxes and sales taxes paid on our cars.
Here’s an example, the Renault Megane RS 250 Cup ,which we all really love, costs about RM236k in Peninsular Malaysia. It costs about RM119k in Langkawi. Even hybrid cars are not completely exempt from tax – only excise and import taxes are waived while sales tax still applies, which explains why the prices of hybrid cars in the regular economic zones in Malaysia are still higher than in Langkawi. The price difference is about 10%. And of course the profits from these hire purchase loans to pay taxes are also taxed – that’s a lot of income for the government.
PKR revealed that their Pakatan Rakyat coalition will be tabling a “radical solution” to reduce the NAP-imposed automotive tax burden in a proposal at the Pakatan Economic Summit next month. It will be interesting to find out what this proposal is and dissect it to see if it’s truly workable.