The importers of Honda have stopped ordering hybrid cars after the budget's car tax reform made them costlier than vehicles in the same class that pollute more.
A spokesman for the company said the measures were "ridiculous" and showed the government did not understand the concept of hybrid cars.
Hybrids are powered by a combination of fuel and electricity but during traffic stops the engines switch to self-charging batteries, cutting the CO2 emissions completely.
A spokesman for the Finance Ministry said that while the government is analysing parts of the budget that had been "overlooked", this measure will only change once "proof" of the cars' effectiveness is produced.
The spokesman added that so far only 30 hybrid cars have been sold in Malta, a figure that was challenged by the Honda importer who said it had sold 36 alone in under a year and a half.
The government spokesman said the budget was not trying to discourage hybrids but wanted to ensure a streamlined non-discriminatory system of taxation. Since hybrids were previously given substantial tax cuts, the new prices make it seem as if they were purposely becoming more expensive. "The reason they are more expensive is because the technology is more expensive," he said.
However, the spokesman for the Honda importers said that is exactly why incentives needed to be launched to go green. "Now people will have to pay thousands of euros more to buy an eco-friendly car. It's just not worth it. So there's no point in importing them unless something changes," he said.
The importers of Toyota, which also produces a hybrid model, will continue supplying the car because, according to a spokesman, "there are still some people who are prepared to spend more for the environment".
But considering this was promoted as a "green budget", he had been expecting the government to give incentives rather than make hybrids more expensive.
"People are now rushing to buy the hybrids before the prices go up. They were led to believe the hybrids would become even cheaper than they were, not more expensive," the Toyota spokesman said.
The new road tax announced by the government in the budget was meant to penalise fuel-guzzling cars with high emissions. But the complex system also depends on the car's value and length.
Through this system, the government has brought about a situation where, contrary to what is happening around Europe, hybrids have become more expensive.
In a number of congested European cities, hybrids have been promoted through tax cuts and other benefits. In London, hybrid drivers do not have to pay the exorbitant congestion charges that everyone else has to pay. In fact, these cars have gained immense popularity around the world because they are eco-friendly, economical and better for public health.
When it comes to CO2, the Honda Civic hybrid emits 109 grams per kilometre but only when the engine is running. "When the car is idle you can put your mouth to the exhaust pipe and it will do you no harm, so, in practice, it emits much less than 109 grams, which is already low," the spokesman for Honda importers said.
As things stand, Honda's Civic hybrid is now about €5,000 more expensive than the standard Civic 1.8 litre petrol.
Similarly, at about 160 grams of CO2 per kilometre, the Toyota Auris 1.4 litre petrol is €10,000 cheaper than Toyota's hybrid Prius.
"The measures are simply not based on the polluter pays principle. It simply does not make sense," the Honda spokesman argued.
Honda is now trying to persuade the Association of Car Importers in Malta (ACIM) to change the government's mind over the position of hybrids.
But when contacted, ACIM secretary William Shaw refused to comment, saying only that untimely comments can damage the market.
He did not even confirm that the association would challenge the government's measures.