Taxes higher on new cars

Government is losing thousands of liri in registration tax and VAT because the percentage of these taxes on the value of a new cars is far higher than that on imported second-hand cars, the Association of Car Importers Malta (ACIM) told The Sunday Times yesterday.

"Car taxation is a means for the country to attempt to control pollution and raise funds to manage its waste and other projects," ACIM said, going on to explain exactly how this works.

Seat Cordoba 1,398 cc 16V 75 bhp

Base price prior to registration: Lm5,147.10
Registration tax: Lm1,987.13
15% VAT on Lm7,134.23: Lm1,070.13
Showroom price: Lm8,204.36

In this case, registration tax and VAT amount to over 37 per cent of the car's showroom price. Depending on the cubic capacity of a car's engine, these taxes can constitute up to 100 per cent of a new vehicle's value as declared by the manufacturer.

"Government considers the car manufacturer's declaration of value as reliable, trustworthy and acceptable," ACIM observed.

"With respect to the importation of old second-hand vehicles, Government deemed it necessary to apply a different system. Indeed, Government refuses to rely only on the Used Vehicle Importers' Association (UVIA) members' declaration of the value of the car imported.

"Government has imposed minimum levels of taxation on second hand imports. ACIM understands that this measure was implemented because of the possibility that a UVIA importer would under-declare the value of his vehicle, bought off some Japanese Internet site or bulk trader of reconditioned vehicles.

"In the event that a second-hand car is bought for a value that makes a higher about of tax payable, he should declare accordingly and pay higher tax."

Anyone buying a new car with full extras is paying more in tax because the car's base price increases and this is reflected in the tax paid. "If an old second-hand vehicle is loaded with extras, however, since its engine cubic capacity does not increase, it will only pay more tax if the increase in value is declared to Customs by the second-hand car importer."

ACIM affirmed that the principal force driving a car importer's business is commercial. "Fortunately for all citizens, however, environmental considerations have become an inevitable part of the commercial landscape within which serious business people are obliged to operate.

"These environmental considerations are a cost of operation as much as any other part of the company's cost base, such as wages and rentals. In all events, one must still have environmentally acceptable premises that are compliant with planning standards required to prevent a small country from suffering the excessive frustrations of Urbania.

"None of the members of the ACIM dump their cars in public pathways or on centre strips. None of them take up entire pavements with their vehicles, supplanting pedestrians who find themselves walking on a main road while cars snuggle on the kerb".

The ACIM explained that car taxes and conducive showrooms were tied to the environment because cars had a negative impact on the environment. "As they get older, cars get dirtier and dirtier. In other countries, governments reward those whose cars have the lowest carbon dioxide emissions.

"This provides incentives to business because a link is established between clean products and attractive pricing. How can it be that in Malta the link is between dirty products and attractive pricing," ACIM observed.

According to documents passed on to The Sunday Times, ACIM said it found it hard to believe UVIA claims that cars produced in 1999 have Euro 4 equivalent engines. Even according to Malta Transport Authority (ADT) Single Vehicle Type Approval requirements, Japanese-built vehicles do not reach EU emission standards according to Directive 96/96/EEC.

Euro 4 technology, if bought, costs more than engines with lower exhaust emission standards, yet UVIA sells its cars for less. "This does not add up," ACIM said.