Sales have slumped, car importers complain

Car importers complained yesterday that the government has left them and consumers in the dark over the revision of the car registration tax and as a result, sales have plummeted.

The Association of Car Importers Malta (ACIM) has called on the government to announce its plans without further delay so that new car sales will regain the momentum they had before the government announced its intention to revise the tax last November.

ACIM secretary William Shaw said when contacted that from monthly sales of between 650 and 700 cars, sales dropped by 250 in June and July.

Moreover, they could not issue quotes to prospective buyers because they did not know how the new tax will be calculated.

Customers were postponing their decision to buy till after the new registration tax is announced, on the assumption that the price will be substantially lower.

Speaking at a news conference, Mr Shaw said importers were calling for an urgent meeting with the government to finalise the new vehicle tax system.

The government was feeling comfortable with progress on the new vehicle tax regime because the figures for the first six months of the year, in terms of cars delivered, were more or less the same as last year's. But the government did not know that they had received far fewer orders than last year.

The importers were ordering cars "blindfold", not knowing what the level of sales would be.

This was leading customers to complain about the price of new cars with the discrepancy between Malta and other EU countries becoming even more distinct since Malta adopted the euro.

Compared to Italy, for example, cars are between 26 and 35 per cent more expensive.

Lower prices would lead to more cars on the roads with the latest technologies and safety features and greater fuel efficiency. Car manufacturers spent €20 billion on research and development last year and new cars emit 13 per cent less CO2 than they did 15 years ago.

The association met Finance Minister Tonio Fenech only once in May after passing on its proposals to the government in a report last September, and then held one other meeting with two ministry representatives.

Commenting on the proposed new system, partly based on CO2 emissions, congestion tax and tax based on vehicle length, Mr Shaw said ACIM did not agree with the proposed tax element on congestion.

Congestion charges are usually applied in cities, and there is already one in operation in Malta, in Valletta, Mr Shaw said.

The price of small cars will go down with the new tax system but medium-sized vehicles will cost the same while larger cars will become more expensive. This, he said, will negatively affect families with children who would opt for a medium-size car.

The importers were complaining about the lack of consultation on the new tax and how it was going to work in practice while the government continued to charge VAT on the registration tax - a tax on a tax - in breach of EU directives.

Only Denmark levies higher tax rates than Malta, it was claimed.

Replying to a question about the workings of its pro-posals to the government, Mr Shaw said that according to their calculations, if the government abolishes the car registration tax and instead slightly raises the circulation tax of all the 292,000 vehicles on the island - the road licence - it would collect the €50 million it is currently collecting from tax on new cars.