Car owners’ club petition for lower taxes on vehicles

The car owners’ lobby MAC has launched an online petition calling for a reduction in vehicle taxation, claiming Malta has one of the highest car tax wedges in Europe.

Alfred Farrugia, who heads the Malta Automobile Club, said the latest tax trends report for the EU showed vehicle taxation in Malta – as a percentage of total taxation – was the highest in the EU.

Malta’s road tax (ACT) – a tax based on car size, emissions, and vehicle tax – was said to comprise 3.7% of total taxation in 2015, jumping slightly up from 3.4% in 2014.

Farrugia said this had reversed a trend that saw car tax falling from 6.7% of total taxes in 2003.

The data Farrugia refers to is a proportion of all tax revenues paid to the State in 2015. In 2015, the report says Maltese drivers paid €109 million to the taxman in ACT.

Malta is then the EU member state with the 15th highest percentage of direct taxes as a proportion of all tax revenues.

“Why are Maltese car owners and drivers burdened with vehicle taxation disproportionately higher when compared with other EU citizens?” Farrugia said in a statement. “In Estonia and Lithuania, car owners pay only 0.2% in vehicle taxation, while in the UK they pay 1.8%, that is half as much as we pay in Malta. Is this what is meant that Malta is the best in the EU? When it comes to vehicle taxation, Malta is the worst in the EU, and the authorities know it.”

Malta’s ACT is based on a polluter-pays principle, having replaced an annual licence fee that was only based on a car’s engine capacity. Car owners also pay a registration tax on purchase, which is similarly based on car size and emissions.

But Farrugia claims the ACT is applied in a flawed manner.

“Vehicle registration tax and the annual circulation licence tax are higher for larger vehicles than for smaller ones, independently of the number of kilometres driven during the year. Which vehicle pollutes more? A small vehicle driven practically all day long, seven days a week, or a slightly larger one driven for a couple of hours on the weekend, and one or two short errands during the week?”

Farrugia specifically referred to pensioners who do not drive their cars around when they are retired – perhaps an indication into his gripe about paying more tax for larger cars, even though they are not driven regularly on the road.

“The major part of air pollution in Malta is not caused by small passenger cars, but by commercial vehicles, mini-vans, large trucks, water and petrol bowsers, cement mixers, buses and coaches. But the authorities seem to be afraid to take any measures to address the air pollution caused by these large vehicles,” he said.

“Between 2013 and this year, the government collected €528.6 million in vehicle taxation, but it spent only €56.3 million in road construction and improvements, apart from other funds provided by the EU. So what did the government do with the balance of €472.3 million? Is it not obvious why we have traffic congestion?”