We've heard this all before, it's beginning to sound like a broken record – why don't we impose a petrol and diesel fuel tax on higher capacity vehicles? This has again been suggested by Raub MP Datuk Ariff Sabri Abdul Aziz in his personal blog.
This is in reaction to Deputy Finance Minister Datuk Ahmad Maslan, who defended the Government on Twitter by pointing out that fuel prices in Malaysia remained the lowest in Southeast Asia. He goes as far as praising Prime Minister Datuk Seri Najib Razak as the only PM to have reduced fuel prices, referring to the drop from RM2.70 to RM1.80 in September 2009.
The "drop" wasn't exactly a drop, of course, as it was the price of RON 95, which was introduced as the new base fuel. The price of RON 97 has gone up and down since, and is now pegged at RM2.75 per litre as of September 2014. RON 95, meanwhile, has been on a (slow) upward trajectory, settling at RM2.30 after the 20 sen increase last week. Diesel followed the same trend, now at RM2.20 per litre.
Back to Ariff Sabri's suggestion, he says that the most "practical solution to the petrol and diesel issue" is for the Government to introduce a fuel tax on all vehicles above 1,600 cc (1.6 litre). This should be done to the benefit of the target groups, as in the lower income people, as well as to "prevent the undeserving ones from benefiting."
Expanding on the new petrol and diesel tax, the Raub MP says it makes sense to tax the owners of bigger capacity cars and big diesel users. "Poorer people like us drive lower cc cars; the bigger capacity cars, above 1,600 cc are driven by better off owners. So we tax them," wrote the MP under his Sakmongkol AK47 pseudonym.
Ariff Sabri proposes that a multi-tiered tax band be imposed, which would cover vehicles with capacities ranging from 1,601-2,000 cc, 2,001-2,500 cc, 2,501-3,000 cc, 3,001 cc and above. But instead of paying more at the pumps, the Government could just collect the pre-arranged tax amount at the next road tax renewal. Foreign vehicles would be taxed at customs offices.
What do you think of this suggestion – yay or nay? We say that any notion of taxing solely based on a vehicle's engine capacity (like how our annual road tax is structured) is completely outdated, especially with the recent trend of engine downsizing. Here's a quick example: should a RM210k BMW 316i be taxed less than a RM76k Proton Inspira 2.0 just because it has a smaller engine?
A more practical (not to mention fair) way is to rate cars depending on their carbon dioxide (CO2) emissions, where if it emits more, you pay more (both road tax and the new fuel tax, if so imposed). For much older cars, a capacity-based system may be relevant. Like, you know, how it's done all across Europe.
Furthermore, a CO2 emissions specification has been planned for Malaysia's new Energy Efficient Vehicles (EEV) scheme, so it's clear that a precise measurement system has been thought of (or at least will be). The problem is, this would require the introduction of Euro 4 fuel in Malaysia, as our current Euro 2M fuel will result in higher CO2 emissions compared to the same engine running on the higher grade fuel.
And while we're on the subject of EEV, a system based on fuel consumption figures (for any given weight, a la the EEV classifications) would be a good alternative too. There's already a system in place to measure how efficient a car is in Malaysia, so why not extend it to our archaic road tax structure, and if need be, the new petrol and diesel fuel tax too? What say you?
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