The recently-unveiled vehicle registration and “annual circulation” taxes are supposedly based on the polluter pays principle, but this couldn’t be further from truth.

This new system is the equivalent to taxing households based on the average energy-efficiency of their electrical products rather than taxing the actual consumption of electricity. And what this means is that people who, for example, wish to buy a high-emissions car to utilise only on weekends, would be forking out substantially more money in taxes and licences than the people who drive low-emission cars multiple times a day, despite the fact that the latter are clearly doing more harm to the environment.

To quantify the problem, let’s say one has a very low-emissions car (CO2 100g/km) and drives 10,000 kilometres a year. This would mean a total of 1 million grammes of CO2 per year. Now, let’s suppose another person has a high-emissions car (Co2 300g/km) and drives only 2,000 kilometers a year. This would mean a total of 600,000 grammes of CO2 per year, or 40 per cent less than the other person. Assuming both cars are bought in 2009, it would cost the latter a staggering e500 more in license fees yearly, or 500 per cent more.

The system is discriminatory even if two people own the same vehicle. Let’s say the yearly licence fee is e400. The first person is a businessman who commutes to work every day and spends e40 per week on petrol. The second person is a pensioner who only uses the car once a week, and spends e5 on petrol per week.

The former would be paying a total of e2,480 in fuel costs and licence fees per year, while the latter would be paying e660 per year on the same. This means that while the businessman is harming the environment eightfold relative to the pensioner, his costs are only 3.75 times that of the pensioner.

The new licence fees also make the purchase of a new vehicle unfeasible. Let’s say a person owns an 18+ year old 1.3-litre petrol car that emits 150g/km in Co2 (an extremely conservative guess). Under the new regime, in a 10-year period, the licence fees would amount to e1,020 euro (e102 per year). On the other hand a new very low-emissions vehicle (100g/km or less) would cost e1,263 in licence fees in the same period. Even without taking into account the actual costs of buying a new car, a low emissions vehicle will therefore still cost you more than keeping your old car.

The solution is therefore to do away with the registration tax and current licence system, and instead introduce a system that charges drivers according to the amount of Co2 emitted by their vehicle per year.

Concretely, this would entail recording the mileage of the car on a yearly basis, the number of which would be multiplied by the CO2 emissions figure of the car. The tax would be progressive, similar to that of the new electricity tariffs, meaning that the more CO2 one emits, the more one pays on a per-gram basis. To quantify: 1 million grammes of CO2 emitted in one year would cost, for example, e100 euro (e1 per 10,000 grammes), while two million grammes would cost e250 (e1 per 10,000 grammes on the first million, and 1.50 per 10,000 grammes for the second million).

Unfortunately, a fixed cost based on engine cubic capacity would still have to be imposed on pre-1997 vehicles, since the CO2 figures for these cars are not available. Secondly, it would also make sense to charge a higher per-gram price on cars older than five years, since as the car ages it naturally starts emitting more CO2.

This system is not without its faults. There is such a thing called odometer fraud, which refers to the messing about with the clock or the mileage of a car. However, there are many ways to prevent this: mainly, the mileage on the odometer can be compared with the mileage noted on maintenance and VRT records.

Secondly, if the odometer is an analog one, crooked numbers or gaps could mean that it has been tampered with.

Thirdly, one could compare the yearly mileage records and see whether there’s a major discrepancy in the numbers. If abuse is still rampant, the government could opt to install so-called odometer trackers, which are already available on the market.

All in all, this system is fair and just, as it rewards people with environmentally-friendly vehicles who drive short distances while it punishes people who drive long distances with gas-gusslers. On the other hand the new system unveiled by the government rewards and punishes people on the basis of what car they own, rather than what they do with it.

Andrew Saliba and Keith Zammit

Marsascala