Reduce car prices – Pakatan gameplan

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The latest populist announcement from Pakatan Rakyat has been greeted by widespread scepticism. Instead of offering concrete proposals to push growth and transform the country, the Opposition continues with its strange strategy of announcing populist measures that will only serve to drain the nation’s finances.

Take Pakatan’s announcement that it will reduce car prices by cutting duties if elected. It does seem strange that the coalition seeks to help the high-income groups save even more money.

It is also likely that Malaysians could face a higher tax burden due to this Pakatan policy, warns a Malay business group.

Kuala Lumpur Malay Chamber of Commerce (KLMCC) president Datuk Syed Amin Al Jeffri pointed out that the loss of government revenues from slashing car excise and import duties would have to be compensated through higher taxes.

As a result, Syed Amin predicted any Pakatan government would have to impose new taxation on people to boost its income.

PKR chief strategist Rafizi Ramli had announced on Tuesday that the coalition would revamp the National Automotive Policy (NAP), including slashing excise duties and reducing the taxes on cars, if it ever came to power.

Reducing car prices sounds attractive, but Rafizi never explained how a Pakatan government could get back the estimated RM8 billion it would lose.

The PKR leader claimed that this plan would be used as a major campaign issue in GE13. Really?

Has the Opposition nothing else to attract votes with, that it seeks to help high-income groups save money on their cars that will then lead to higher taxes on everybody else?

Syed Amin pointed out that the current excise duties imposed on cars vary according to the engine capacity of the vehicle.

“Those with higher incomes are generally taxed more because they tend to purchase larger cars with bigger engine capacities… but those in the lower-income category buy vehicles according to their affordability… so the taxes on them (the latter group) are lower,” he told The Malaysia Insider.

That means the amount of tax you pay currently depends on how much money you spend on your car – fancy car, higher tax; cheaper car, lower tax. But any new taxes imposed by a Pakatan government would impact all Malaysians, regardless of income level.

“So if we want to abolish (excise duties) for emotional reasons… it’s difficult… the loss of income has to be compensated somehow,” he said.

Meanwhile, the Malay Vehicle Importers and Traders Association (Pekema) said it was sceptical the Opposition would be able to live up to its promise anyway.

After all, Pakatan’s car fantasy joins its list of populist measures, including the abolishing of tolls and of PTPTN loans. These plans are all unviable financially and would result in higher taxes for everybody, but still Pakatan insists on coming up with such measures in the hope that people will not read the fine print.

“Pakatan Rakyat has been promising the Malaysian community everything they can think of without serious consideration of revenue of country,” said MCA’s vice president Datuk Seri Chor Chee Heung, adding that the promises are “just to get votes.”

Pointing to PR’s promises in its Buku Jingga, Chor warned that if the Opposition comes to power, “within one year, the whole country will collapse.”

Umno’s Datuk Seri Azmi Khalid agreed: “By cutting away taxes, the Malaysian car market will be highly competitive and Proton will have to bow out if it cannot compete.”

He cautioned that “with Proton gone, not only will a few related industries by gone but along with it perhaps more than 100,000 jobs (will be) gone”.

So not only higher taxes, but also the loss of jobs – that’s what Pakatan offers.

All car-making countries like Japan and Korea protect their car domestic car industry through custom duties. If Pakatan does away with these duties just to win votes, it will irreparably damage Malaysia’s car industry for the sake of winning an election.

Long-term national damage for short-term political benefit. That seems to be Pakatan’s gameplan. – The Choice