By Clara Chooi
KUALA LUMPUR, Aug 24 ― PKR promised today that its proposal to slash car taxes would help Proton and the thousands of workers in Malaysia’s automotive industry flourish, allaying fears raised recently by Barisan Nasional (BN) leaders that the national carmaker could go bust if vehicle prices were cut.
In a statement here, PKR pointed out that prior to making its proposal last month, it had already considered the competitive edge of Proton and local carmakers, and their abilities to compete with foreign makes in the automotive industry.
“PKR recognises Proton’s successes and is confident of its ability to surge ahead, seeing its ability to self-sustain despite not receiving excise tax rebates since 2005,” said the statement jointly signed by PKR vice-president Nurul Izzah Anwar, strategy chief Rafizi Ramli and deputy information chief Sim Tze Tzin.
They pointed out that it was the BN government that had decided to stop the excise tax rebates for Proton since 2005, despite recent claims from leaders stating otherwise.
“Since then (2005), all cars produced by Proton and other national automotive enterprises had to pay the same excise duties as foreign car makes,” they said.
They said that Proton today gets its biggest financial aid in the form of research and development (R&D) funds, meant to enable it to explore improved designs and technologies.
Citing Proton’s financial statement for 2011, the PKR leaders said Proton had received an R&D grant worth RM175 million, which was far lower than the tax rebates worth billions that was given to Proton up until 2005.
“Proton’s ability to continue competing in the market and continue introducing new car models even after 2005 proves that the company can continue operations despite it not being protected any longer by such tax rebates,” they said.
The PKR trio then slammed BN leaders for criticising PKR’s proposal, whom they said were merely aiming to stoke racial hatred among voters by warning that the plan would bankrupt Proton and leave the thousands of predominantly Malay workers in the local automotive industry out of jobs.
“Umno-BN is insulting the Proton workforce and other local automotive industry players, many of whom are Malay-Bumiputeras. These remarks, painting a picture as if Proton is still receiving these tax rebates, are malicious,” they said.
The party leaders repeated their commitment that the opposition’s plan to reduce car prices would not see Proton and other local carmakers lose their edge, adding that the thousands of workers the country’s automotive sector would continue to enjoy job security.
“PKR is confident that Proton’s business plan to optimise its under-utilised production capacity in its factories, through co-operation to assemble foreign car makes, will not only help to protect the current jobs but create more employment opportunities,” they said.
PKR had last month offered a complete revamp of the National Automotive Policy (NAP), including slashing hefty excise duties and reducing the triple-tax burden imposed on cars here, should it come to power in the next general election.
The offer to voters is expected to effectively boost the disposable incomes of Malaysians and reduce household debts.
Yesterday, English daily The Star quoted industry sources as saying that the Najib administration is now considering the reduction of car prices in its revised NAP.
Responding later, Rafizi said that he welcomed the news as it validated PR’s proposal to slash car prices through a gradual reduction of excise duties as workable.
He added, however, that it also showed the “hypocrisy” of Umno and BN leaders who had criticised PR who had first publicly mooted such an idea.
Malaysians are currently paying eye-watering excise duties of between 65 and 105 per cent on cars they buy, on top of 10 per cent in sales tax. This means that if a Malaysian consumer pays RM100,000 for a car, as much as RM55,000 goes to the government.
The duties are a lucrative form of revenue for the federal government but have also helped push up household debt levels in Malaysia that, as a percentage of GDP, are the second highest in Asia.
About 20 per cent of the RM581 billion total household debt in the country last year is being held in cars, an asset that depreciates over time.
Many Malaysians say, however, that they have little choice but to buy cars to get around as they feel they cannot depend on the public transportation system.
The taxes are seen by some economists to have distortionary effects and they say a cut could help stimulate the economy by boosting disposable income and reducing the household debt burden.