Economist Dr Geoffrey Williams has proposed that the government should tax the purchases of private electric vehicles (EVs) as luxury goods, instead of offering tax breaks for them. This is because such vehicles are costly to buy and maintain, and therefore can only be afforded by affluent individuals and households.

“EVs are luxury goods in the same way as any other form of luxury goods. Often, they are second or even third cars for a family that has other types of petrol or diesel vehicles,” explained Williams, adding that the tax incentives offered to purchase EVs do not exactly provide essential social benefits for the public.

Economist Professor Yeah Kim Leng, on the other hand, believes that the tax breaks for EVs are crucial in the long run as it could contribute to the government’s efforts in attracting foreign direct investment for the local green economy. With EVs gaining popularity locally, Malaysia’s transition to the green economy can be accelerated, and more EV investors may be encouraged to invest in the industry’s entire supply chain.

“Taxing it (EVs) would counter the country’s long-term aspiration of shifting to green energy, promoting electrification and reducing our carbon footprint,” said Yeah.

The government began introducing tax breaks for EVs under the national budget for 2022, where it provided a full exemption of the import duty, excise duty, and sales tax for EVs. Additionally, a full waiver on the road tax was offered as well, on top of individual income tax relief of up to RM2,500 for the cost of purchase and installation, rental, and subscription of EV charging facilities.

Fast forward to today, the recent tabling of Budget 2024 saw Prime Minister Datuk Seri Anwar Ibrahim – who is also the Finance Minister – announcing an extension to the income tax relief on EV charger rental, purchase, and installation until 31 December 2027. He also introduced the new Skim Galakan Penggunaan Motosikal Elektrik, where Malaysians with annual incomes of RM120,000 or less can enjoy rebates of up to RM2,400 on the purchase of electricity motorcycles. These initiatives are expected to help the government achieve its goal of putting 1.5 million EVs on Malaysian roads by 2040.

Other green initiatives that the government has also announced – outside of EVs – include the Net Energy Metering (NEM) programme to encourage the installation of solar panels by individuals, as well as a “buy back” programme for solar panels.

(Source: Free Malaysia Today)

• TAGS:
• Battery-Powered Electric Vehicles (BEV)
• Dr Geoffrey Williams
• Dr Yeah Kim Leng
• Electric vehicles
• EV Tax Relief
• Geoffrey Williams
• Green Economy
• Luxury Goods
• Net Energy Metering (NEM) Programme
• Professor Dr Yeah Kim Leng
• Skim Galakan Penggunaan Motosikal Elektrik