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Friday, June 13, 2008

Car Duties: How Big? Where has it Gone?

I like this thought-provoking article in Malaysia Today, so, I'm going to copy and paste with my usual highlighting and commentary.

Full article here - http://www.malaysia-today.net/2008/content/view/8763/84/


Car Duty vs Fuel Subsidy, Where Had The Car Duty Gone To?

Friday, 13 June 2008

An estimated of RM 162 billions had been collected over the past 22 years. Actual figures could be much higher..

By A concern citizen

Recent fuel hike had sparked anger across the country asking Petronas account to be made available for public scrutiny to justify why the government cannot continue to subsidy the fuel.

May be all these while, Petronas may not be footing 100% of the fuel bill, is the car owners had paid in advance for fuel subsidy in form of import and excise duties for both local and foreign mad vehicles, as suggested by one article published in the Star recently, and republished by Malaysia Today.

Following up on this topic, I had done a little research myself, and may be others had already done it but did not get highlighted in a wider angle.

I had visited the website of Malaysia Automotive Association to get the statistic of total vehicle sale from 1986 till 2007, to get a broad idea of estimated excise and import duties might have been collected by the government since the inception of Proton, as the import duties were imposed for the excuse of protecting our new start up that suppose to make our nation pride in years to come.

Well, Proton is not an issue for our discussion here, so we will not talk about it's success or failure and the failure cost to the rakyat.

Let's us guestimate how much we had contributed to the government coffers since 1986.

Total vehicle sales since 1986 amounted to 6,264,910 units, both passengers and commercial vehicles included. (Source: http://www.maa.org.my/info_summary.htm).

Assuming the ratio of 60% of total vehicles being locally produced, and rest of them are being imported.

Also assuming average duty collected from local car is RM 10K each, and RM 50K for imported vehicles.

Please note that I had made broad assumption, as the actual figure was never reported by the government in their annual budget and accounts.

An estimated of RM 162 billions had been collected over the past 22 years.

(Seng: $162 Billion is simply obtained from above: 6.26 M cars x (60% x $10,000 + 40% x $50,000) = $162 Billion)

Actual figures could be much higher as import tax was relatively high in the 90s before we signed the ASEAN free trade agreement.

Where had the money gone?

How much fuel subsidy had been given by the government on fuel after being offset by the car duties?

Such amount can be used to build a comprehensive rail network comparable to Japan and Europe, where almost all major cities are connected by rails.

An efficient metro networks can also be build in Klang Valley comparable to London, Hong Kong and Singapore.

I hope the MP will continue to ask for actual figures in the Parliament and show to the rakyat that the car duty and Petronas proceed had been used in an accountable way.

My Comment:

This is - as the author state - likely to be an Under-Estimation, because Import Duties was relatively higher in the 1990s.

Another reason, which the author did NOT state, is the effects of Interest since 1986. A rough guestimation would suggest that the amount, if prudently accumulated today in a relatively conservative investment pool, would EASILY be doubled that amount, or say $162 Billion x 2 = $324 Billion today!

What kind of public transportation system do you think we could have TODAY, if we had $324 Billion to spend?

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