According to Deputy Finance Minister Datuk Ahmad Maslan, the implementation of the goods and service tax (GST) is not an excuse for automotive players to not lower car prices, he told Bernama. He was adamant that prices of cars should drop, as the current 10% sales tax will be replaced by the 6% GST rate.

“It’s a simple calculation to understand, and automotive industry players should not find an excuse not to lower car prices by blaming it on the GST,” he said. The argument made by some that prices will not necessarily come down – as a result of the GST being imposed at every level of the production and distribution chain – were countered by Maslan, who commented that unlike the sales and service tax, this one is eligible for claims.

“Indeed, we expect car prices to fall, but we are not certain of the rate,” Maslan said. According to him, the government has come up with plans to lower the prices of certain goods, so naturally, the prices of cars should take a dive. MAI CEO Madani Sahari had earlier said that simulations made by MAI showed there should be a slight price reduction of between 1% to 3% for most models, including imported cars.

The 6% GST is set to replace the 10% sales tax and 6% service tax (SST) when it comes into implementation from April 1, 2015.