I refer to the letter by Roger Mifsud, “Finance Ministry subterfuge” (TMID, 4 March).

The government had already, in 2007, began looking at a complete overhaul of the car registration tax system. The studies were in line with an EU-wide thought which was to influence the purchase and use decisions of consumers by reawarding those buying low-emitting and younger vehicles while charging a premium on the less efficient and older vehicles. This revision removed any pending uncertainties.

I would also like to take this opportunity to clarify the misconception that a “tax on tax” is necessarily illegal. EU law actually contemplates a tax on other taxes. Article 78 of the VAT Directive states that “the taxable amount of VAT for a supply of goods or services shall include taxes, duties, levies and charges, excluding VAT itself.” For example, most countries have excise duties on cigarettes and alcohol. VAT is then charged over and above this amount which already includes a tax (the excise duty).

Today, there is no decision by the European Court of Justice declaring that Maltese law is not conformant with EU legislation with regards to car registration taxation and neither did the European Commission bring Malta in front of this same court to obtain such decision.

Keith Zahra

Communications Coordinator

Finance, the Economy and Investment Ministry