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Thursday, November 21, 2013

12-year cap on cars an excuse for Putrajaya to collect more revenue through GST, says PKR’s Rafizi

NOVEMBER 20, 2013

PKR strategist Rafizi Ramli (pic, right) continued his criticism against a proposal to impose a 12-year cap on the life span of cars, charging that it was Putrajaya's way of collecting more revenue through a consumption tax that would take off in April 2015.

He said the move would ensure that car owners will have to change their cars often and this would result in additional revenue for the federal government through the Goods and Services Tax (GST).

"I suspect the reason why they want to implement a vehicle end-of-life policy was to collect GST.

"Every transaction involving the sale and purchase of cars, whether they are new or used, will be subjected to GST and as such, the more cars that change hands, the more GST revenue will be collected.

"I suspect it was not motivated by safety reasons but for the Najib administration to squeeze more from the public to make up for the budget deficit," he said in a press conference at the parliament lobby today.

Years of heavy spending, including a fast-growing civil service wage bill, have hampered efforts to reduce the chronic budget deficit.

Prime Minister Datuk Seri Najib Razak aimed to trim the gap from 4.5% of GDP in 2012 to 4% in 2013 and 3.5% in 2014 before returning to a surplus by around 2020.

The deficit has pushed Malaysia's national debt to 53.5% of gross domestic product from 43% in 2008, close to the self-imposed limit of 55%.

Deputy Transport Minister Datuk Abdul Aziz Kaprawi said a few days ago that the Road Transport Department (JPJ) will decide soon on a policy to impose a life span on cars.

The proposal came about after Miros director-general Profesor Dr Wong Shaw Voon said that cars more than 12 years old are not safe to be on the road.

"There is a higher risk of deaths in accidents, as such cars could be faulty without the driver being aware of it. Most cars are designed to have a life span of five to 12 years," he had said.

Rafizi, who is also the Pandan MP slammed the excuse given, saying that it was unacceptable, insincere and made without empirical or scientific evidence.

"We need proof of the risks between an 11-year-old car and a 12-year-old car. To date, there is no proof that 11-year-old cars are safer," he said.

He pointed out that other factors contributed to accidents, such as bad and unsafe road designs, confusing road signs and drivers' attitude.

Zooming in on bus drivers, Rafizi said their pay structure which is tied to the number of trips they made, make them drive faster and deprived them of proper rest, which is one of the main contributing factors of accidents in Malaysia.

On Monday, Rafizi said the proposal should be scrapped as excise duty still remained high.

"Most car buyers are from the low- to middle-income groups who usually take nine-year car loans.
If the 12-year life span is implemented, car owners will be saddled with a new debt three years after they settle their car loans," he had said.

Rafizi's colleague Darrell Leiking (PKR - Penampang) also voiced his concerns, pointing out that safety aspects should be addressed first before considering such policy.

"In Sabah, there are no road lights even on some main roads. It is not the older cars that are causing problems but the facilities," he said.

He said in Sabah, cars cost between RM2,000 and RM3,000 more than in Peninsular Malaysia, which resulted in many people opting for second-hand cars with the maximum nine-year loan tenure.

This means most people will be mired in debt, he added. - November 20, 2013.

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