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Matthew Vella
Brussels is expected to initiate infringement procedures against Malta over its discriminatory registration tax on used cars, MaltaToday can reveal.
Malta’s higher registration tax on second-hand cars is currently being investigated by the European Commission’s directorate for taxation and customs, and is likely to culminate in the first stage of infringement procedures to be launched against Malta this month.
In response to a complaint from a Maltese citizen, an official from the Commission’s directorate said an infringement of EU law could arise if the tax on second-hand imports was higher than that imposed on new car imports.
Head of unit Micole Wiebke said an investigation is under way into the reduction of registration tax in order to comply with EU law, which prohibits member states from imposing any tax on EU products in excess of that imposed on similar domestic products, or so as to afford indirect protection to other products.
Malta’s tax regime on cars discriminates between new imports and used cars by setting a minimum tax charge for used cars. Both imports are subject to a tax of 50.5 to 75 per cent, according to engine capacity, but used imports have a minimum charge of Lm1,200, stepped up progressively according to engine capacity. While the tax on new cars is calculated on their cost, import and freight charges, the tax on used imports is assessed on a valuation by transport authority officials.
Wiebke also informed the complainant that an infringement of EU law could also arise if the assessment of the taxable value of a second-hand car did not reflect its real depreciation, so that it exceeded the residual tax incorporated in the value of similar vehicles already registered in Malta.
The minimum charges on used cars were raised back in 2003 as a budgetary measure, most likely as a result of pressure by new car importers to disadvantage the importation of second-hand cars.
Between 2000 and 2003, used imports increased from 13 to 40 per cent of total motor vehicle imports. The Association of Car Importers (ACIM), spearheaded by lawyer Georg Sapiano, claimed that used car imports were contributing to an ageing and more polluting car fleet, and putting close to 1,000 jobs on the line.
The government responded with higher taxes on used imports, but a year later, used cars practically doubled, increasing by 86 per cent, or 3,000 cars, between 2004 and 2005: evidence of a healthy consumer demand for cheaper second-hand cars.
The Commission’s investigation is however unlikely to touch upon taxes imposed on used cars from Japan, the main country of origin for used imports, where motor vehicles cannot spend more than a number of years on the road: an incentive to sustain the Japanese automotive industry.
But the thriving used car market has also exposed the reality of new cars whose prices were hiked up by hefty registration fees, pushing consumers to opt for cheaper alternatives, which usually means older and more polluting cars.
The Maltese government has so far expressed its opposition to an emissions-based licence fee that would make cars more expensive the longer they are kept on the road, claiming that high registration taxes help curb the demand for cars.
mvella@mediatoday.com.mt |
