Publication: NST
Date of publication: Aug 2, 2012
Section heading: Main Section
Page number: 018
Byline / Author: By Jeong Chun Phuoc
THE article Downside of removing car taxes (NST,
July 29) by S.M. Nasarudin S.M. Nasimuddin (Naza Group of Companies joint
executive chairman) is especially candid from an automobile industry
perspective.
In no way is this more apparent than in the
statistic shared by S.M. Nasarudin in highlighting the negative impact on the
gross domestic product (GDP), besides the loss to both automobile companies and
consumers, as a direct result of a complete removal of car taxes.
The debate on the total removal of car taxes is not
without the underlying perils of exerting inadvertent pressures on the national
economy, which is struggling to achieve progress within the national key
economic areas (NKEAs) framework.
As a general rule, for the consumers particularly,
any reduction in taxes is welcome news. The proposed Goods and Services Tax
(GST) to replace the old Sales and Services Tax (SST) (of five per cent and 10
per cent respectively) is to primarily improve tax collection and invigorate
the economic machinery of Malaysia.
Increasing the collection in taxes will augur well
in the construction and maintenance of public infrastructure and amenities for
the people. The GST is a vital tool in achieving economic wellbeing.
Since 2004, when the GST proposal was announced in
Budget 2005, numerous public awareness programmes have been carried out by the
government to educate the general public and the business community (Preparing
for the GST, NST, Dec 9, 2010). This includes efforts to counter GST
misperception and concerns.
Seven years have passed, and it is understood that
both the public and private sectors have established administrative and
technical set-ups to incorporate the new GST system.
The GST policy manifest and its advantages are well
documented in nearly 140 jurisdictions which have embraced the GST system - the
closest example is Singapore.
The recent enactment of the Price Control and
Anti-Profiteering Act 2010 has set a positive momentum for the final execution
of the GST. What remains to be seen is the need for immediate GST
implementation.
The GST, in essence, will address the inherent
weaknesses in the current SST system and hence, any delay will imperil the
achievement of overarching public interest objectives delineated under the
Economic Transformation Programme (ETP).
As a matter of fact, the recent pronouncement of
six Strategic Reform Initiatives (SRIs) can be accelerated along the GST
revenue framework to achieve competitiveness in the realisation of core
economic transformation blueprints.
In the same way, if car taxes are to be removed,
the public and stakeholders must be assured it will not cause immediate
catastrophic downstream impact on all stakeholders and consumers. At this point
of debate for and against car taxes, advocates for the complete repeal of car
taxes provide no assurances to the concerns raised by S.M. Nasaruddin.
This is, of course, not to say that car taxes are
always good for the economy and consumers, because car tax to foreign
automobile exporters is no music to their ears.
Car taxes are just another accepted form of
economic strategy observed in both developed and developing countries to
protect core national assets and interests at home, in light of the nebulous
World Trade Organisation provisions on the dismantling of tariffs on all goods
and services at the global platform. Whether car taxes are a boon or bane for
the economy, this must be addressed in a fair, transparent and objective
manner, similar to the case for GST to replace the old SST. To argue against car
taxes without evidence is like putting the cart before the horse.
Jeong Chun Phuoc, Shah Alam, Selangor
