Fuel price increases, which came into effect a few weeks ago, were no surprise. The price of oil and the value of the dollar rose significantly.
It seemed pathetic however, that concurrent with the stinging news of the new prices, the Ministry for Investment Industry and Information Technology issued a graphic to remind the public that the taxes and prices paid for fuel in Malta are well below the prices found in many other EU States. The bottom part of the graph, as published in the media, was truncated. This omission gives the visual effect of making the Maltese level of fuel taxation hug the bottom of the graph while the other columns reach up to the top.
The same ministry should also have handed out graphics at the same press briefing, showing the percentage overall tax paid on imported personal road vehicles in all EU States. The presentation should also have had the lower 50 per cent of the graph cut off, but that would have left just six EU States in that graph. Denmark leading the pack for most taxed cars, followed by Finland, Malta and Greece.
The UK has high fuel taxation levels (unleaded: 66.7 per cent, diesel: 64.6 per cent). In August 2005 unleaded was over 91p (Lm0.58, 14cents dearer) and diesel 95p (Lm0.60, 18 cents dearer). In the UK, only 17.5 per cent VAT is paid when a car is purchased, and there is no Registration Tax.
We all know the taxes we have to pay over here. Let us do some maths.
A 1900cc-engined (diesel) new vehicle in the UK could cost £18,000 (Lm11,300). The same car in Malta costs Lm13,800, a difference of Lm2,500 even though the Registration Tax and VAT add up to Lm4,720 (CIF is higher in countries with low vehicle taxation and vice versa, but this difference will be abolished across the EU in the coming years).
The extra sum paid locally (Lm2,500) would cover the extra cost of the UK fuel price if we bought 13900 litres of diesel fuel. Then we would break even. Alternatively, the total Registration Tax paid and VAT (Lm4,720) would cover the extra cost of the UK fuel price if we bought 26200 litres of diesel at UK prices. At seven litres per 100 kms (40 miles/gallon) we could have done 375000 kms. That is the distance from the earth to the moon and probably the average distance covered in the lifetime of two cars.
And the latest. A vile shot aimed squarely at the spine of the crippled car owner. A proposed 20 cent fuel hike to pay for other peoples' utility bills. This would place fuel prices in the same league as the UK but no respite from Registration Tax on road vehicles. The extra Lm36 million a year that are to be raked in from this fuel hike is one and a half the yearly income from Registration Tax on imported road vehicles.
It will be like more than doubling the Registration Tax on cars overnight. If it is so politically acceptable to increase fuel prices by 20 cents per litre to solve the mess, what is preventing the change from registration tax to fuel tax as a measure of road vehicle taxation.
The minister can therefore propose that Fuel Tax will be implemented and Registration Tax abolished altogether. Everybody then has to pay for W&E according to what he wastes or saves.
In Minister Austin Gatt's words: “In other, larger, more competitive countries no one subsidises anyone and every one pays his way.” What incentive will there be to restructure the way we use energy at home or at work if somebody else is paying for the shortfall.
What is it with politicians? Do they have a grudge against cars? They want cars out of the capital, off the streets, marshalled into single lane roads like chain-balled inmates and now they want to stop them filling their tanks.
There are so many other things that can be taxed instead. How about a surcharge on bags of cement, increased VAT on the Maltese love affair with bathroom porcelain or kitsch decorative ware with disgusting aesthetic values.
Albert M. Bezzina
MOSTA