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Vehicle taxation in Malta: worst in Europe

When it comes to vehicle taxation, Malta’s remains the worst in Europe as a percentage of total taxation, according to the 2016 edition of “Taxation trends in the European Union” published by the European Commission.

In 2014, the first full year of this administration, vehicle taxation in Malta as a percentage of total taxation was 3.5 per cent, while the EU 28 average was 1.3 per cent. The eurozone average was just 1.2 per cent! This means that vehicle taxation in Malta is almost three times as much as the eurozone average.

The lowest rates were in Estonia and Lithuania where vehicle taxation was 0.2 per cent of total taxation. This means that vehicle taxation in Malta is 17.5 times as much as that in Estonia and Lithuania.

In 2005, the European Commission had actually proposed the abolition of vehicle registration tax, and a number of EU member states did remove it. In Austria, Bulgaria, Czech Republic, Estonia, Lithuania, Luxembourg, Poland, Slovakia, Sweden and the United Kingdom there was no registration tax in 2012.

Vehicle taxation in Malta has been the worst in the EU for several years, having been 6.7 per cent of total taxation in 2003. Over the past 10 years, the rate admittedly went down practically every year, with the exceptions of 2011 when it remained at 4.2 per cent as in the previous year, and 2014, when it remained 3.5 per cent as in 2013.

In real terms, however, the total amount of motor vehicle registration tax and annual circulation licence fees (taxes) increased from €81.9 million in 2013, to €94.5 million. It is clear that the ratio between vehicle taxation and total taxation only remained the same as in 2013 because total taxation had increased.

Vehicle taxation in Malta is almost three times as much as the eurozone average

The Malta Automobile Club launched a petition to reduce vehicle taxation in Malta in October 2013, but it is evident that this petition has fallen on deaf ears! Given that the economy is doing so well, what is keeping the government from reducing vehicle taxation? In addition to vehicle tax, the government is collecting more than €140 million in duties and taxes from petrol and diesel this year. And to add insult to injury, the government is allocating a very small percentage of vehicle taxation to investment in road construction and improvements.

We do not need the Spanish consortium INECO-Systematica to tell us how much investment in road building and improvements is needed to decrease traffic congestion.

In 2017, the government estimates that it will collect €116.6 million in revenue from vehicle taxation, €8.6 million more than 2016. On the other hand, it is estimating an expenditure of only €14 million in road construction and maintenance in 2017, just €1 million more than 2016.

What is the government doing with the balance of €102.6 million that it is collecting from the Maltese consumers? Maltese drivers and car owners need to wake up and realise what is the root cause of the current situation.

Perhaps the time has come for our Cabinet ministers and parliamentary secretaries to start paying for vehicle taxation from their own pockets to realise how high vehicle taxation is in Malta!

Alfred Farrugia is the president of the Malta Automobile Club.

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