PETALING JAYA: Najib Razak has questioned the rationale for extending the new vehicle sales tax (SST) exemption, warning it could lead to an increase in household debt.
Citing a report which stated that the nation’s household debt-to-gross domestic product ratio had surged to 93.3%, the former prime minister expressed concern that the extension would amplify the financial burden of households in years to come.
“Is the Perikatan Nasional government’s KPI to see the ratio of household debt hit 100%?” he asked in a Facebook post.
Najib said that any increase in household debt would also mean people having less money to spend, invest and save as they would have to pay their monthly instalments.
“This would have a negative impact on the economy in the near future,” he added.
According to Najib, the tax exemption would only benefit “banks, the rich, car companies and insurance companies”.
“This is because the rich stand to receive bigger discounts when buying luxury cars,” he said, adding that Putrajaya stood to lose RM5 billion this year from the exemption.
“This means the government would collect RM5 billion less in SST revenue which could be channeled to the B40 and M40 groups who are in greater need of aid during the current movement restrictions and lockdowns.”
Najib suggested, however, that the exemption could be targeted by giving it only to those who have never purchased any vehicle in the last five years, or for the purchase of non-luxury cars.
The government recently announced the new vehicle sales tax (SST) exemption period would be extended to Dec 31 this year.
This is the second extension of the SST relief which was introduced in June of last year. The exemption was initially slated to end on Dec 31, 2020, but was extended till June 30.