From Dr A. M. Bezzina

“The government agreed with the facts on registration taxes on used cars as presented by the European Commission” (Government defends car registration taxes – TMI, 24 March). Better late than never. However, this submissive statement contrasts the belligerent attitude adopted by Tonio Fenech, the Parliamentary Secretary in the Finance Ministry, in his statement published two days before in another English language daily (Times of Malta, 22 March – Three ministries to study EU Commission request). This change in attitude can only be explained by the likelihood that the “legal advice” sought by government corroborated what the Commission was saying.

The government statement speaks of “reducing traffic congestion levels on our roads” which implies that the Maltese roads are congested. The government, continues the statement, imposes (high) registration tax on used and new (imported) cars in order to reduce traffic congestion levels. This is an oxymoron if I ever saw one. If our roads are not congested, high registration tax as a tool to reduce congestion is not necessary. If our roads are congested, high registration tax as a tool to reduce congestion must de facto be ineffective because it has been in use for over 13 years. The statement is also carefully worded to avoid the term “to restrict the importation of more vehicles”, a taboo phrase with regard to Article 28 EC of the European Treaty.

Another statement contradicting the facts is the government’s assertion that the current registration tax structure has environmental credentials. The current minimum taxation clauses applying to used car imports have not prevented a steady, year on year increase in the market share of the used car import business. Rather, it is the high level of taxation imposed on new car imports that acts as a disincentive for new car purchases, gradual car fleet renewal and lowering of the car fleet average age from its current 12 years.

The whole statement demonstrates a poor grasp of environmental issues related to road traffic and traffic management. While CO2 dominates the “emissions” argument, there is total disregard for other traffic related pollutants which have more serious health implications and which are related to aged vehicles and over-utilised commercial vehicles. An aged vehicle fleet is the characteristic Maltese scenario evolved during the 13-year watch of the Road Vehicle Registration Tax Act. The government continues to ignore the effect of poor town planning and mega building projects sanctioned in densely populated regions as an important cause of traffic congestion.

The government reminds us of the 525 vehicles per 1000 population. High registration tax is related to low annual new car purchase per 1000 population and an aged vehicle fleet. It does nothing to reduce the number of registered vehicles on the island. On the contrary, it promotes the retention of older vehicles till the very end, irrespective of emissions issues. CO2 emissions are not related to the total number of registered vehicles on the island but to the number of driving licence holders and the popularity of the public transport system. In any case, passenger car CO2 emissions account for only 6.5 per cent of all CO2 emissions of the island. The sure way of encouraging more people to consider alternative modes of transport to passenger cars is to offer an effective, efficient and comfortable public transport system.

The government admits that “lowering registration tax on second-hand cars would encourage more people to purchase private cars that are not necessarily of a cleaner, more fuel-efficient type”. Conversely, lowering registration tax on new cars would encourage more people to purchase private cars that are EURO IV compliant and hence cleaner, more fuel-efficient as well as safer.

The arguments of the government in defence of retaining the vehicle taxation system for used cars are weak. With the same statement it unwittingly made a case in favour of abolishing high registration taxes on new cars.

Any delaying tactics in concluding this issue is going to take its toll on government revenue, the car import business and its employees. The moment the infringement proceedings were made public, potential car buyers are going to postpone purchase if it could mean saving hundreds or thousands of liri.

The authorities have a workable alternative to the current registration tax system based on true environmental concern. It promises to preserve current government revenue incorporating a partial shift to fuel tax, which is a fraction of the increases in the fuel prices seen in the last five years.

Albert M. Bezzina

MOSTA