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‘It’s not the death-knell for local car makers’

 | July 27, 2012

Slashing duties and tax would make Proton and Perodua the cheapest cars in the market, says PKR's Rafizi.

PETALING JAYA: PKR strategic director Rafizi Ramli dismissed suggestions that plans to slash duties and tax would send local car makers to the grave.

He said the new policy which will be included in the federal opposition bloc’s election manifesto would instead make Proton and Perodua the cheapest cars in the market .

“I believe those from the lower income group, this majority (voters), will still stick to buying cars that are cheap and reliable for their needs,” he told reporters here, referring to the two main national car makers.

Critics said Pakatan’s proposal to cut hefty excise duties and sales tax would hurt Proton’s business as consumers would likely go for imported cars that would be cheaper if the policy is implemented.

Rafizi blasted his detractors as ignorant, saying they “clearly have no clue as to how excise duties work”.

Excise duties were imposed on a specific group of goods at a fixed amount regardless of the varying brands or qualities. For cars, the percentage only varied according to the engines’ capacities.

And unlike what was widely claimed, duties charged on imported cars are far lesser than the 75% excise duties imposed on local cars. If the duties are removed, imported cars will be around the average region of RM50,000 while local cars will around RM25,000 to RM30,000.

Malaysians are currently paying duties of between 65% and 105% on cars they buy on top of 10% in sales tax which is among the highest in the world.

This meant that if a Malaysian consumer paid RM100,000 for a car, as much as RM55,000 went to Putrajaya.

Rafizi said this was one the factor behind the country’s staggering household debt of which 20% of the RM581 billion total are being held in cars, an asset that depreciates over time.

Also read:

PM’s hefty bills can finance cheap cars plan

Do you own a Proton, Mr Critic?


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