Malaysia Should Abolish Road Tax In Budget 2023 - Zahid Md Arip

Renewing our annual road tax is probably one of the least worrisome expenses in the car ownership journey. That is, unless you have a vehicle with a very large displacement engine. The fact that it’s an annual chore might irk some folk, but is it fair for Malaysians to pay at all?

Senator and former political secretary to Mahathir Mohamad, Muhammad Zahid Md Arip reckons that road tax is more burdensome to the Rakyat than it is beneficial to the country, calling it ‘cukai atas cukai’ or ‘tax-on-tax’ as reported by Sinar Harian.

Abolish road tax in Malaysia 

He was referring to the fact that Malaysian motorists are already subject to a multi-layered system that taxes us in the form of a vehicle’s sticker price such as high (maybe even exorbitant) import duties, excise duties, and SST…and don’t forget the many tolled highways a lot of us need to travel through on a daily basis. And on top of all that we still have to pay road tax every year.

“Rakyat Keluarga Malaysia cannot continue to be burdened by compounding taxes upon taxes and Budget 2023 is the best opportunity for the Prime Minister to pleasantly surprise the people,” he says.

No road tax, introduce Vehicle Excise Duty

He also adds that Malaysia could use the United Kingdom, which has abolished road tax since 2015 (wait, what?) and charges Vehicle Excise Duty since 2017 instead, as an example in the execution and implementation of this.

That said, some would argue that the system used in the UK is even more convoluted as there are essentially two rates: one paid for the car’s first year on the road based on tested CO2 emissions, and another for all subsequent years based on how much the vehicle cost when new.

Still, it does mean that with ‘excise duty’ being paid off on an annual basis instead of in one large sum here where it inflates new vehicle prices at the showroom, it could result in lowered prices across the board as well as making a possible dent in the fuel subsidies.

Does Malaysia new a new road tax system? 

That claim is starting to sound like a bridge too far but perhaps movement in any direction is preferential to perpetuating our outdated displacement-based road tax system, which has only been revisited to accommodate engine-less fully electric vehicles.

We’ve covered that in a prior article and why its rate measurement being tied to a car’s total power output is nonsensical, but at least EV owners have been given a delay from having to deal with road tax at all until after 2025 thanks to the government’s measures put in place to encourage EV adoption in Budget 2022.