Herman Grech
Will new vehicles be cheaper after all?
Cars bought under the new tax regime will be subject to a lower registration tax upfront in most cases, but will face a higher annual road fee under the government's plans to revise the system.
A new annual 'congestion circulation' tax will replace the road licence fee, though a portion of the tax which is paid up front will remain, sources close to the government told The Sunday Times.
The revision of the system is clearly intended to incentivise the purchase of smaller, low-emission cars, while owners of bigger fuel guzzlers are likely to fork out more in tax.
Sources said that under the proposed system new cars will be subject to a higher road licence fee - (currently around €70) - which will be Co2 based and linked to the age of the car. All other cars on the road will remain under the old regime.
The government is also expected to introduce a system of credits whereby the 'extra' registration tax paid under the old regime for the cars purchased this year will be given as credit on the annual emissions charge levied under the new regime.
The Sunday Times has learnt that over the past days the government has met with representatives of car importers and second-hand car dealers to receive feedback on the new proposed system.
Overall, the discussions appear to be positive though the government is still finalising some technical aspects of its proposal before implementing the new system.
However, there are indications that the government would like to introduce the new regime before the summer recess.
Under the proposed system, a tax will still be payable upfront, based on the Co2 emission levels of the car (applying the polluter pays principle - the higher the emission the higher the percentage of tax on the value of the car) and the size of the car (bigger cars will be paying more tax than smaller cars, which reduce congestion and take up less parking space).
However, it is expected that some cars will cost more than they do today.
Car importers recently appealed to the government to announce its vehicle registration tax revision measures without delay in order to stem what they described as a dramatic fall in sales.
The European Commission has sent a formal request to Malta to amend the tax regime on the grounds that the minimum thresholds imposed on second-hand vehicles imported from the EU are discriminatory. It also objects to VAT being levied on the tax.
Vehicles are currently taxed between 50 and 75 per cent of their value, depending on engine capacity, and are subjected to 18 per cent VAT on the amount of registration tax payable, making cars sold in Malta among the most expensive in Europe.
The Nationalist Party electoral programme had promised a review of the tax system to make it more environmentally friendly.
Finance Minister Tonio Fenech had made it clear that the government wanted to continue addressing the element of congestion, underlining that it was not in the national interest to double the number of cars purchased.
However, contrary to some reports it is understood that the government has no intention of introducing a parking charge.
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Dulsimo Zahra
Jun 24th 2008, 17:01
Does anyoe know when will the government actually remove this tax?
James
Jun 23rd 2008, 20:00
Looks like my dream of owning a Bugatti Veyron is gonna remain just that. :(
More taxes worse 'roads'.
D Grech
Jun 23rd 2008, 15:23
Good Bye my dreams of owning a meaty sports car on Malta's roads. I think its in everyone's interest to know better what the new tax registration would look like. Although cars are a commodity, it effects our daily lives.
So let me get this right, government will enforce more taxes to have your car on the road (under the 'Environmental conscious gimmick' but at the same time will most probably make it more dear to buy a new/second hand car from abroad.
In other words, (please someone correct me here) we'll pay more for less again??
Paul Savona
Jun 23rd 2008, 13:18
Why don't they just make life easy.
I have seen this work in other countries and it is fine, less complicated, save money on infrastructure, does away with one aspect of the traffic wardens job and saves everyone time.
Do away with the mandatory road tax that we must all display, and just add road tax to the price of fuel for cars. Should be easy to work out how much. Form 1 stuff.
Basically the more you use the road, the more road tax you pay. Simple & Fair.
Alan Debattista
Jun 22nd 2008, 14:22
For the congestion problem, apart from some more improvement on the public transport, I think the government should also consider an incentive to buy / use more scooters and motorcycles. But, if this is done one day, I suggest that what needs to be done first is to educate the general public about the respect one should give to the motorcyclists.
Albert M Bezzina
Jun 22nd 2008, 13:09
"The government wanted to continue addressing the element of congestion, underlining that it was not in the national interest to double the number of cars purchased."
The element of congestion should be addressed by a ten fold improvement in public transport in general and that for school children. It can also be addressed by taking note of established town planning norms never applied to the Maltese conurbation. The doubling of cars purchased could be combined with the quadrupling of cars which are scrapped via fiscal incentives for passenger car renewal currently having an average age of over 12 years. Renewal of an aged vehicle fleet is considered an important means of improving air quality. The truth is that the Government's only interest is to use car taxation in whatever form as a fiscal tool for restricting the importation of this class of goods which goes against Article 28 EC of the European Treaty. It also seems that the Government's concern for the 'issues of congestion' can be addressed by sanctioning the Mistra village development and other useless dwelling developments in areas which simply do not have the road infrastructure to cope with such monstrosities. In the national interest indeed!
Claudia Borg
Jun 22nd 2008, 13:05
we all complain of having to many cars on our roads. However as soon as car importers feel a drop in sales, they place pressure on the government to have a new tax regime that will encourage car sales. The greatest shame of all this is that although car importers and dealers have been consulted on the new tax regime, the government seems to have forgotten completely about environment groups! This new tax seems to encourage a shorter life-cycle for cars as the older the car, then more tax the owner will have to pay. So this will encourage scraping of a car at an earlier time in its life, even if it could still be maintained in proper condition and control of emissions. Of course I don't see car importers and dealers complaining. Shame that the environment always come second to everything.