Car registration tax

A recent verdict of the European Court of Justice states that the imposition of minimum thresholds within the vehicle registration tax framework cannot tax "more onerously" vehicles imported to EU countries from other member states.

This ruling has significant implications on the Maltese authorities, since the ADT cannot discriminate between the newly imported second hand vehicles and their locally available substitutes. With the present duties, the tax component contained in the imported vehicles would be higher than that of registered vehicles, so infringing competition rules.

In the run-up to Malta's accession to the EU, Maltese politicians and bureaucrats stated that they would fight for our rights to benefit from a free, competitive market, however it seems that nothing of the sort is taking place. Only silence is leaking from the halls of power.

However, the chairman of the ADT, Gianfranco Selvagi, stated recently that the market's regulator was still waiting for the actual text of the judgment to "study it." In the days of immediate communication and of Smart Malta, the ADT was waiting to have a copy of the verdict in its hands before even contemplating what should be done.

Mr Selvagi also stated that Malta has the right to establish its own tax levels. This is fair "subsidiarity", maybe even as fair as the illegal satellite licences we had to pay up to a few years ago. "The Polish case", as Mr Selvagi terms it, may not apply here. Assuming it does, who would stand to lose? Obviously a government aiming to maximise its revenues. I trust that the authorities will look at the "nitty-gritty" of the verdict, either to see if it applies, or to see whether any loophole can be found. The article also stated that the tax regime in Malta acts as some kind of barrier to the increase in the number of cars on the road and pollution. Statistics state that Malta has one of the highest car ownership rates in the world - clearly there is something wrong.

Furthermore, if the whole present system is designed for the sake of emissions, then why should there be registration tax on newer vehicles, which are not only fuel efficient but also compliant to international emission standards such as Euro IV? Vehicle registration duties influence only the number of vehicles present, not the level of use. The purchase price of a vehicle has become so high that once one decides to buy one, it would be very costly indeed to leave it in a garage; the owner has to recuperate the fixed cost incurred by spreading the high rate of registration tax over the useful life of the vehicle.

The present smokescreen of excuses is thicker than the smog we daily breathe in. Hiding behind environmental concerns is not an option. It is becoming more and more obvious that the vehicle registration tax is not there to please environmentalists; it is there to please the Exchequer.