Vehicle registration tax

To the best of my knowledge, the current problems with the EU in respect of vehicle registration tax revolve firstly around the fact that VAT is charged on top of this tax and, secondly, around the fact that in the case of importation of pre-owned vehicles, there is little relationship between the registration tax payable and the value of the vehicle. Generally, the "minimum value" applies, which depends solely on the size of the vehicle's engine. As an example, were one to import a motor vehicle with a 1,600cc engine worth €3,500, the minimum tax payable would be €6,755, almost 200 per cent tax.

It seems very obvious that mainly importers of new cars benefit from this arrangement. The average Joe Citizen paid and is still paying through the nose for the privilege of owning a motor vehicle.

The primary difficulty in simply removing this minimum value imposed on pre-owned vehicles is one of revenue. The second one concerns the interests of importers of new cars.

These have been drumming into our heads subtly, and less than subtly, two great untruths by which they seek to influence decisions that will be taken in this respect.

The first great untruth panders to our environmental sensibilities. They have managed to convince most of us that subjecting used car imports to a reasonable rather than extortionate level of taxation will result in Malta drowning in a sea of bangers, the oft-repeated cliché "becoming a dumping ground".

The simple fact is that, at present, a person with a budget of, say, €4,500, realistically can only consider a vehicle which is a minimum five years old. Were said person to have the option to spend his/her money elsewhere, this person could purchase an equivalent vehicle that is just two years old.

This would result in a total rescaling of vehicle values, such that a run-of-the mill 12-year-old vehicle would be worth very little, not worth keeping on the road if major repairs become necessary.

Ultimately, the average age of the vehicles on Malta's roads would drop dramatically, possibly to the European average. So the myth that reasonably-taxed used imports lead to older cars on the road is totally "busted" and environmentally and health-wise that can only be a good thing.

The second untruth is the impression that is sought to be given that any imported used car is by default "bad" or lacking. One cannot understand how a vehicle that has been driven for 50,000 kilometres in any country other than Malta is in any way inferior to an identical vehicle driven the same distance locally. On balance of probabilities, the foreign-owned one would be the better vehicle, what with much of that mileage being long distance driving on far better roads.

Such a vehicle would be more likely to have been properly serviced at a main dealer, thus making it a cleaner car, too.

So any solution which seeks to restrict used car imports is environmentally and socially counterproductive. The only issue remaining is one of revenue.

It has been suggested that a higher annual road tax, disproportionately loaded onto the post-tax amendment imports, be imposed in lieu.

This is a highly unimaginative and unfair option that, yet again, also has a negative rather than positive environmental impact because we would be encouraging "pre-amendment" low-road tax vehicles to run forever.

The concept of annual road tax, especially in its environmental aspect, is seriously flawed. It simply represents permission to use a motor vehicle.

It bears no relationship to actual vehicle usage. If I use my vehicle minimally, I still pay just as much tax as someone who utilises his vehicle to the fullest extent, who is contributing a far greater share to our planet's woes and the quality of the air that we breathe. Thus, even the connection between engine size and road tax rates is extremely tenuous. The only truly fair tax that can be said to be environmentally sound is one on usage - in practical terms, a tax on fuel.

This is logical in all aspects: If one drives a fuel-inefficient vehicle, one pays more; if one uses a vehicle more, or more than necessary, again, one pays more, thus both are discouraged. Fuel usage is directly connected to CO2 emissions, so that is sorted too.

Ideally, annual road tax across the board would be reduced to a nominal administrative charge and this shortfall and the shortfall due to the registration tax reduction be incorporated into an increased tax on fuel. It happens to be particularly unfortunate that oil prices are what they are and fuel is already heavily taxed, thus this option would take serious political courage.

Maybe our minister could look elsewhere for the balance, rather than in the direction of the motorist, Maybe a painless percentage point increase in the VAT rate?

Ultimately, for all the options, at this point I have to "pass" to his competent hands to study the figures that he undoubtedly has access to. I just hope that he will not "pass" on an opportunity to courageously undertake an overdue overhaul on the way we look at motor vehicles within the context of taxation and environmental matters.