Stuck In The Past: Why Road Tax In Malaysia NEEDS To Change

There’s plenty to say on the state of road tax in Malaysia, but as far as one-word summaries go, we can all roughly agree that words such as “confusing”, “outdated”, or “weird” hit the mark decently well.

Though some might gripe about its mere existence, most of us accept it as a necessary evil that’s used to ensure that the road network in Malaysia continues to expand and is well maintained (ideally). While there are more roads being built, there are too many examples of shoddy quality and of existing ones being neglected.

Recently, the topic of the rampant potholes that road users, particularly in the Klang Valley, have had to deal with has been thrown into sharp focus, to which the Public Works Department (JKR) have now committed to rectifying, but empty promises have been made before. Regardless of their newfound motivation, this calls into question just what our annual road tax payment is really being spent on prior to this.

Out Of Date. Out Of Mind.

In case you weren’t already aware, there is only one metric used that the Road Transport Department (JPJ) uses to calculate your road tax: engine displacement, measured in cubic centimetres.

While other countries have long since abandoned this simplistic methodology and have moved on to an emissions-based system (such as most of Europe and North America), Malaysia persists. Before more complex means of accurately calculating (primarily) how much carbon dioxide a car produces, it was generally assumed that a vehicle with a larger engine consumes more fuel and thus emits the most pollution, so encouraging buyers to purchase smaller displacement cars and automakers to offer more downsized engines also had environmental benefits.

Nowadays that’s only true to a certain degree. Not only are engines much more efficient, we’ve come to know that even small displacement engines are also very capable of as much pollution if tuned a certain way, especially if it’s turbocharged or supercharged, but that seems lost on policymakers in Malaysia.

Tiers For Fears

The tiered road tax structure that results is - unsurprisingly - baffling as it treats (or taxes) anyone with a car that has an engine above 2.0-litres (or 3,000cc) like the devil incarnate, artificially narrowing the variety of cars offered within our borders.

Most of us pay our small annual fees but ignore the underlying system, of course, mostly because by now our landscape of cars has been altered to favour everything under 2.0-litres, but also due to the fact that we’re actually aware of what a steaming mess it is. And if it doesn’t effect us, why bother delving deeper?

Let’s try breaking that road tax structure down into smaller, more easily chewable bite-size pieces.

For these purposes I’ll be talking about privately owned cars in Peninsula Malaysia, does not include SUVs and MPVs, which use a similar tiered system with different rates.

Also, automakers almost always round up your engine's displacement. For example, though your car might be described as a "1.5-litre", the accurate displacement isn't 1,500cc but is slightly lower, such as 1,498cc.

Fixed Rates (Non-Progressive)

Everything is pretty tame until the (1,600cc) 1.6L mark since you pay a fixed annual amount depending on your displacement tier that never exceeds RM90 per year. Seems reasonable.

Cars between 0-1,000cc engine capacity have a base rate of RM20 annually and are free of progressive rates. Final road tax: RM20.
Kancil and Kelisa owners, we see you.

Cars between 1,001-1,200cc engine capacity have a higher base rate of RM55 annually but are also free of progressive rates. Final road tax: RM55.
Models such as the Perodua Axia fall in here, but this applies to pricier cars such as the Peugeot 208 Puretech too.

Cars between 1,201-1,400cc engine capacity get an increased base rate of RM70 annually and are also free of progressive rates.Final road tax: RM70.
Myvi 1.3 owners, Iriz owners, Saga owners. Welcome to the party.

Cars between 1,401-1,600cc engine capacity get an increased base rate of RM90 annually and are also free of progressive rates. Final road tax: RM90.

Too many cars fall into this category and it’s no surprise why. This is as high as you can go without falling out of a fixed annual rate.

Semi Fixed Rates (Progressive)

This is where things get unnecessarily confusing and considerably more expensive. JPJ are clearly upping the squeeze here but it isn’t anything too crazy yet. Between 1.6L and 3.0L, road tax can range between RM200 to RM2,130 per year.

Cars between 1,601-1,800cc engine capacity have a base rate of RM200 annually and increase by RM0.40 per cubic centimetre, capping the maximum annual rate at RM280.

Cars between 1,801-2,000cc engine capacity have an increased base rate that starts at the previous maximum of RM280 and increases by RM0.50 per cubic centimetre, capping the maximum annual rate at RM380.

Cars between 2,001-2,500cc engine capacity have an increased base rate that starts at the previous maximum of RM380 and increases by RM1.00 per cubic centimetre, capping the maximum annual rate at RM880.

Cars between 2,501-3,000cc engine capacity have an increased base rate that starts at the previous maximum of RM880 and increases by RM2.50 per cubic centimetre, capping the maximum annual rate at RM2,130.

Cars between 2,501-3,000cc engine capacity are in No Man’s Land, basically. The base rate starts at the previous maximum of RM2,130 but can increase EXPONENTIALLY by RM4.00 per cubic centimetre.  You’ve no doubt seen some of the insane road tax stickers that sail way past the 5 figure mark, and this is why. Deepest condolences.

Room For Change. Now.

It really is high time for some sort of reassessment of how road tax works in Malaysia and the authorities should be clear about the underlying goal. Are larger engines taxed more to protect the environment? Or are they there to protect our national automakers which are generally in the business of producing small(er) cars with small engines anyway?

If air pollution and exhaust emissions really are the main priority (which I doubt), hiding behind a simplistic measurement of engine displacement really should be stopped in favour of something more accurately reflective of a car’s environmental impact.

The reason why I personally doubt this is the case is because, believe it or not, even before electric cars ever had a chance to flourish here in earnest, the road tax structure for EVs (which is based on how powerful the car is) is even more confusing and prohibitive.

As my colleague explains rather well, you might own a Porsche Taycan Turbo S and perhaps take every step possible to charge it off-the-grid or via sustainable means, but because of its 761PS power output, you are still forced to pay RM12,094 a year in road tax.

There must be a better way, for vehicles powered both by internal combustion and electricity, since it seems that these calculations are hinged upon either outdated or poorly considered criteria.

I’ll try taking a stab at this, for what it’s worth, in a follow-up to this article.