The tax conundrum

Forced induction allows cars like the Jetta to circumvent the existing road tax system with their smaller displacement but still powerful engines. — Picture courtesy of Volkswagen AGForced induction allows cars like the Jetta to circumvent the existing road tax system with their smaller displacement but still powerful engines. — Picture courtesy of Volkswagen AGKUALA LUMPUR, Feb 15 — The road tax on my car expired a few weeks back, which necessitated the inconvenient emptying of my wallet to pay for the sticky piece of red polymer to keep the car road-legal. And by emptying, I mean parting with 830 pieces of ringgit. Not a measly sum by any account.

The Malaysian road tax regime calculates tax by the size of a car’s engine. The larger the engine, the larger the tax. In the days when apples were just fruit you ate and not sought-after electronics, this made perfect sense.

The larger the car, the larger the engine needed to propel it. Engine size, therefore, had a direct correlation to a car’s size, and thus the space it took up on the road — hence the term, road tax.

But as I was busy peeling off the imperiously stubborn road tax sticker from 2011 and placing the new 2012 equivalent on my car, I looked around my condominium’s car park and had an epiphany of sorts.

This “tax-by-cubic-capacity” system is SERIOUSLY flawed.

Nothing drove home this fact more effectively than a curious peek at the road tax discs on neighbouring cars.

There’s a Mercedes-Benz E-Class parked nearby. At almost five metres long and two metres wide, this 2011 model is a significantly larger car than my own. You’d imagine the owner probably pays more than I do for his road tax.

Wrong. The owner pays a bit under RM280 in taxes to keep his car on the road.

Same story for the guy who drives the Volvo S80 parked a floor up. Here’s a car that’s the size of a Mercedes-Benz E-Class and, yet, his road tax comes up to a grand total of RM379. A smidgen more than the Mercedes-Benz to tax, for sure, but not significantly so.

And, of course, there’s the guy who drives a Volkswagen Jetta parked in the adjacent parking structure. He pays… you better be sitting down for this… RM70 in road tax per year. You read that right, my friend. Seventy ringgit. To put this into perspective, this makes the 4.6 metre-long VW cheaper to tax than a shorter, narrower Proton Inspira.

Like I said. Seriously flawed, this tax system.

The reason for the disparity lies in the fact that my car packs a relaxed 2.5L in-line six under the bonnet. The Mercedes-Benz, on the other hand, packs a hard-working 1.8L turbo engine. The Volvo, a highly-strung 2.0L turbo. And the VW, a frenetic 1.4L super-and-turbocharged engine.

As a result, despite my car occupying the same, if not less, space than these cars, I end up paying more than twice the amount in road tax to keep my little German on the road. All because my car has a bigger engine.

The new generation of cars coming from continental Europe all adhere to the “downsizing”  trend so prevalent over there. Making the most power from the least cubic capacity is a byword for manufacturers — driven principally by a road tax regime that has moved from the capacity model to one that taxes a car based on its carbon-dioxide output.

The more polluting the car, therefore, the higher the tax. A sensible system, if there ever was one. As such, manufacturers in Europe have been forced to innovate and make engines smaller, less polluting, while offering all the creature comforts, safety and luxury of space from cars of yesteryear.

The Malaysian road tax regime, however, has rather sadly not caught onto this trend. Thus, we’re seemingly forever stuck with an illogical system where a luxury German saloon is taxed hundreds less than a run-of-the-mill Malaysian sedan.

For once, I wished long and hard that size didn’t matter.


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