'Scrapping tax won't rob Proton, Perodua's edge'

PKR said Pakatan Rakyat's plan to scrap excise duty on cars should they take over Putrajaya, will not rob local car producers such as Proton and Perodua of a price edge over its competitors.

PKR strategy director Rafizi Ramli today took a swipe at his Umno counterparts - who said removing the duty would spell doom for local auto makers - for failing to understand the taxes.

He said they did not know the difference between excise tax, which is applied across the board, and import tax, which only applies to foreign cars.

"There are some parties who try to paint a picture that a tax revamp would mean that Proton will be at the same price as other (imported) cars.

“That's not true. Proton and Perodua will still have its price edge in the market," he told a press conference at the PKR headquarters today.

This, Rafizi explained, is because the abolition of the excise tax will cause car prices, both local and foreign, to fall proportionately.

"For a RM50,000 to RM60,000 local car that is taxed at 85 percent, if you remove it, they will fall to below RM30,000. 

“So your Proton Persona or Gen 2 will be around RM27,000 or RM28,000. Similarly, a foreign Honda car at RM80,000, if you remove the excise tax, it will be about RM50,000.

"So it is between buying a RM30,000 and RM50,000 car. 

“I believe many in the lower income group want a car because they have no choice, and they would choose the cheapest and most reliable car. 

“They would not want to be in debt for nine to 10 years just to get a Honda Accord or Honda City," he said.

[More to follow]