The European Parliament’s Economic and Monetary Affairs Committee has approved an amendment tabled by Joseph Muscat calling on member states to refrain from imposing double taxation in the case of Vehicle Registration Taxes, especially on those EU citizens returning to their country of origin.

The committee solidly backed the amendment saying that “member states are strongly urged to refrain from imposing double taxation in the case of registration taxes; particular consideration should be given to the case of EU citizens returning to their country of origin after spending more than two years in another member state.”

The Labour representative said that the Maltese government should take the cue from this call.

“The Maltese government is not only imposing a high level of what is essentially double taxation on Maltese returned migrants, but is also preventing Maltese citizens and foreign residents in our country from benefiting from the internal market in this sector,” Joseph Muscat said.

The Economic and Monetary Affairs Committee approved the report that supports the European Commission’s proposal to phase out vehicle registration taxes in favour of an annual emissions tax. This change would be budgetary-neutral for governments in the medium-term.

Nevertheless, such a change would benefit consumers since not only would it make double taxation a thing of the past, but it would also lead to a reduction in car prices, enhance transparency and comparability of prices, and would make it viable to buy a car from another country.

Furthermore, it would decrease the amount that would need to be sourced from credit facilities, and would encourage the purchase of smaller and more environment-friendly cars which would be subject to a lower tax rate.

The report also suggests the incorporation of a refund system based to compensate those who would have already paid a registration tax. The Committee approved further amendments by Joseph Muscat calling for this refund system to be fair and transparent.

This report will now go to the Plenary Session. If approved, this will be a strong signal to member states to reach agreement to change the present system. The Maltese government is reportedly against such a change.