MEPs ask Brussels to force change in vehicle tax

Labour MEPs Joseph Muscat and Louis Grech yesterday sent an official letter to the European Commission asking it to oblige Malta to change its taxation regime on the importation of both new and second hand vehicles.

According to the two MEPs, the current system of imposing VAT over and above the vehicle registration dues when a car is imported into Malta goes against EU legislation.

The two MEPs also insisted that if this were removed, car prices should fall by a margin of between Lm250 and Lm1,000 depending on the model and the engine.

In their letter of complaint, the two MEPs asked the EU executive to make sure that all those Maltese who had paid this "illegal" tax since Malta's accession to the EU would get a refund.

Both Mr Muscat and Mr Grech recently discussed the issue with EU Taxation Commissioner Laszlo Kovacs who assured them that the matter has already been raised with the Maltese authorities.

Asked by The Times about the legal basis of their claim, the two MEPs referred to a ruling of the European Court of Justice on a Danish case known as the De Danske Bilimportorer which confirms that it is not legal to levy VAT on vehicle registration tax.

The Labour MEPs urged the government to announce changes in the vehicle taxation system during the next budget without waiting for the EU to take action against Malta.

"The government should immediately commit to a refund schedule to consumers who have been made to pay extra for their vehicles, before the European Commission obliges the government to do so.

The government should not resort to unjustifiable technical excuses to bypass EU rules," they said.

Mr Muscat said this development is yet another confirmation that there needs to be a gradual and sensible transition on the way the importation of vehicles is taxed, from the current registration tax system to an emissions contribution system.