HR-V buyers suffer, Cullinan owners get rewarded by Malaysia's backwards road tax system

For as long as I have owned cars, there has been something that has constantly befuddled me. That would be the Malaysian road tax system.

It's no secret that our road tax system has been - for the longest time - dictated by engine capacity. Not power outputs, not carbon emissions, just plain old engine capacity. To call it archaic is an understatement. 

This has recently been made even more complicated by having a separate road tax for electric cars (yup, that's right). 

So what exactly is so backwards about Malaysia's road tax system? Allow me to attempt an explanation. 

The logic is pretty.... dumb

In Peninsular Malaysia, the road tax fee difference for saloon cars and SUVs is mightily confusing. Let me illustrate why. 

At the lower range of the spectrum, you pay RM 280 annual road tax for a Toyota Corolla Altis with a 1.8-litre engine. Conversely, a Honda HR-V - also powered by a 1.8-litre engine - demands RM 360 for its annual road tax.

At the other end of the said spectrum, let's compare a Rolls Royce Phantom and its SUV sibling, the Cullinan. Both are powered by the same 6.75-litre twin turbo V12 engine. In the Phantom, annual road tax is RM 19,005. For the Cullinan? RM 7,640.

It is at this point that you will spit out whatever you're currently drinking and go, "What in tarnation?!" And that would be the appropriate reaction. 

In essence, what's happening here is the well-heeled get 'rewarded' by enjoying lower road tax (compared to the Phantom) when they buy a Cullinan, but in comparison a regular Joe/Jane gets 'penalized', having to fork out more for road tax for a Honda HR-V (versus a Corolla Altis).

I know, I know, if you could afford to buy a Rolls Royce, a RM 19,005 road tax is hardly going to trouble your bank balance. For mere mortals like myself, what I really want to know is: why the RM 11,365 disparity between the Phantom and Cullinan's road tax? Money is still money, right?

To put it simply, said system rewards people buying gargantuan, large-engined SUVs but penalises regular SUV buyers. As if the rich need any more help in saving money. 

Speaking of the rich, here's another one for you to chew on: You pay more road tax for a A90 Toyota Supra (3.0-litre engine - RM 2,130) than a Porsche 718 Cayman S (2.5-litre engine - RM 880).

Look, I know these are enthusiasts' playthings and all. I just find it odd that sports car with the higher sticker price when new (that would be the RM 660k Porsche) ends up paying less road tax than the RM 600k Toyota. 

Also read: 5 cars with the highest road tax price in Malaysia

It gets better in East Malaysia, but no less confusing

Yes, let's apply the same comparison for our compatriots across the pond. In East Malaysia, road tax for a Toyota Corolla Altis 1.8 is RM 224. But what about a Honda HR-V of the same engine size? RM 199. 

The logical reasoning for this apparently is that due to the terrain of East Malaysia, SUVs and high-riding vehicles are preferred. But that can't be the reason why West Malaysians pay more road tax for SUVs in the lower spectrum, right?

What about the higher spectrum in East Malaysia? Applying the Rolls Royce Phantom and Cullinan comparison again, the road tax for each is RM 6,086 and RM 5,403 respectively. So, the pattern of SUVs paying less in the higher spectrum is consistent, albeit with a less glaring difference.

The difference is, buyers of regular SUVs in East Malaysia don't get 'penalized' the way West Malaysians do. Told you our road tax system is backwards, not to mention mysterious. 

What about electric cars?

Remember that I mentioned Malaysia's road tax system is based on engine capacity? What about electric vehicles (EVs)? Well, they can't be taxed on engine capacity since..... they don't have an engine technically. 

To answer that question, EVs are taxed based on the output of their electric motors. The unit used for electric motor power is kilowatt (kW). Let's take a look at how road tax is for EVs are currently derived in Malaysia. 

Using EV models that are currently available for sale in Malaysia, let's quickly calculate how much their road taxes cost.

Well, I'm of the opinion that this road tax calculation sounds more forward-thinking than calculating traditional engine cubic capacity.  The more powerful your car (electric or otherwise), the more you ought to fork out in road tax, even though the progression scale of EV road taxes are a bit imbalanced now.

Again, I know it somewhat contradicts what I just said, but shouldn't buyers of electric cars get some sort of reward or incentive for doing so?

Also read: Is the road tax actually cheaper for electric cars in Malaysia?

My suggestion would be: apply this output-based road tax to all types of powertrain, but incentivize the EV buyers with lower electricity tariffs, purchase prices, or tax breaks. That way, EV buyers still get to feel good about themselves (as if they don't already). 

In any case, there will be an announcement soon on new EV incentives and policies. Whether or not this extends to the road tax system, only time will tell. 

Conclusion

As you can tell, there is little to no cohesion in the way road tax is calculated in Malaysia, be it for vehicles with internal combustion engines or electric motors. It just seems to me that Malaysia is stuck in a time warp and unable to innovate or move forward in this aspect. 

As long as this system is in place, the rich will continue lapping up large-engined, monstrous SUVs with little consequence. There is a loophole, why not exploit it? All while the regular SUV buyers do not get the same, scaled road tax savings. 

And that, in a nutshell, is why Malaysia's road tax system is so backwards. Oh, by the way, if you were wondering, your road tax money doesn't go into road maintenance funds. Makes you really ponder, where does your road tax money actually go to.