My Stupidly Obvious Road Tax Reform Plan Is Stupidly Obvious

Previously, and bluntly, I tried to explain why I thought the road tax sytem in Malaysia is embarassingly out of date and does not seem to conform to any underlying motive.

I think most of us will agree that, even if my specific arguments seemed flawed, there is something fundamentally broken about how (1) how road tax is calculated and, (2) how our roads seem to only get worse over time - and not just in very urbanised areas such as the Klang Valley. Let me remind you:

• Potholes everywhere 
• Bumpy patch jobs that are that never last long
• Uneven manhole covers becoming artificial potholes 
• Ineffective drainage system leading to floods
• Use your imagination, it's probably true

A Stupidly Obvious (But Also Better) Way?

Anyway, back to the road tax situation - ultimately, it's easy to complain. Though I had ranted about how the system made no sense, I did not present an alternative. Here is it: 

My idea is a simple one, and it's based on the cost of the car. Due to our apparent indifference to promoting the adoption of fully electric vehicles given how they're taxed (more confusingly), it shouldn't matter how large or small our engines are if CO2 emissions are more influenced by other factors. 

In what messed up system are we putting up with if the roadtax I pay for a Subaru XV costs the same as some other (very fortunate) person's who bought a multi-million ringgit Koenigsegg Gemera. It makes no sense. Present your argument.

Basically, if you can afford to buy an expensive car, you can afford to pay for the expensive road tax regardless of the arbitrary size of the engine. In the same way we fork out each year to LHDN based on our income, road tax should be calculated on the price (or value, if used) of the car. This also correlates to how our auto insurance is calculated, and it seems stupidly obvious. 

• You earn more, you pay more income tax. You earn less, you pay less (or none at all).
• Your car is worth more, you pay more to insure it. Your car is worth less, you pay less to insure it.
• Why can't it work the same way for road tax? 

If my income tax and car insurance are based on variables such as my salary and depreciation, why does JPJ force me to pay the same road tax for my car FOREVER? Especially if most of our roads are in a bad condition and we have to pay tolls everywhere we go anyway?

Where Everyone Wins

A car doesn't need to be taxed like crazy just because it has a bigger engine, especially now where there is no mercy after the 3,000cc mark.

Not only will this promote a more varied automotive landscape in Malaysia, but it will be a boon for the sale of older cars that might otherwise struggle to find a new home. After all, it's better for the environment for a car to serve out its service life than to laboriously be turned into scrap.


If you think that this would only benefit car enthusiasts that might love to buy cheaper used cars with large engines, remember that older cars are also more prone to mechanical issues, which we have to get fixed, which further props small businesses or your taman mechanic. 

To our detriment, we also likely pay for more fuel, which is more money circulating in the economy. But also remember that, due to that fact, we're also less likely to use those old big-engine cars on a regular basis. 

This proposed road tax structure is also a self-policing system that will ultimately make cars more accessible to more people, not just ones powered by internal combustion, but is also effective with EVs and hybrids. 

For example, for most of us, being an early adopter of fully electric cars is beyond our financial means. Cars like Teslas or a Lucid Air or a Rivian R1T costs a lot of money, obviously. But when they realise that the road tax is making their cars even more prohibitively expensive, and they can tap a much larger market by undercutting their competitor, it would only incentivise them to innovate towards lower price points. 

Whether that's discovering new materials, refining the production process, engineering a less costly battery, or just reducing their profit margin - we all win as consumers.

How We Got Here?

At its most essential level, there is something hugely wrong with a road tax calculation structure that's tiered on engine displacement. In the past, the size of an engine was what a lot of automakers used to denote different variants, and the only way to access a top-spec trim was to get the one with the biggest engine. 

It was a simpler time when a BMW 325i actually had a 2.5-litre engine (inline-6) or a Mercedes-Benz S 500 used a 5.0-litre engine (V8). Then automakers got wise to the fact they could sell more cars if they got around this big displacement problem and help their customers save money. 

Enter small displacement engines with forced induction (turbochargers, superchargers) - problem solved, right? Many governments responded by switching to an emissions-based road tax system, under which those smaller engines performed even worse than their higher displacement but naturally aspirated counterparts. 

This forced automakers to prioritise their research to lower that CO2 figure (and other pollutants), which is an ongoing battle even today. Importantly, Malaysia stayed stagnant in the face of this, continuing to charge us purely based on displacement - and quite unfairly too.
 
If you think that my hastily proposed idea is worth exploring or complete cat crap, let me know and let's get into a constructive discussion. Peace.