Motorists need lobby to fight highest car taxes in EU

Maltese car owners are still are very highly taxed on vehicles when compared to other EU citizens, in both registration tax as well as annual circulation tax, according to European Commission data on car taxation.

The "double payment", as Alfred Farrugia calls it, is part of Malta's new regime of car registration fees based on vehicle carbon emissions and the annual tax payable on a car as it gets older and starts to lose our on its emission efficiency.

Farrugia, a retired diplomat who wants motorists to form their own political action lobby, says Maltese motorists don't need the EU to tell them how heavily taxed they are. In 2003, the actual revenue from car registration amounted to Lm22.8 million (€40 million) while revenue from motor vehicle licences amounted to Lm11 million - a total of Lm34 million - some 38% of all licences, taxes and fines collected by the state that year.

Compared that with 2011, the latest revenue figures available: motor registration tax is at €42 million, while ACT revenue was at €46 million - altogether 38% of the €228 million collected from licences in 2011.

"It is clear that motor vehicle owners in Malta need to start taking care of themselves and to form a lobby to begin consulting and negotiating with the public authorities. While vehicle owners are expected to give a reasonable contribution to Malta's economy, there is no reason why they should be charged excessive taxes and fees on their vehicles," Farrugia said.

"Annual circulation licence fees should also be reduced drastically for all vehicle owners. There is no reason why a Maltese citizen who had brought his own car from his former non-EU residence be charged a circulation fee 10 times as much as he was paying abroad for the same car."

The European Union is proposing the reduction or termination of the vehicle registration tax, and where it will not be completely abolished it recommends that it be not higher than 10% of the pre-tax price of the car.

"Registration tax in Malta is abominably high on older cars, whereas the EU expects older cars to lose their value through depreciation and therefore should be taxed less not more. Malta is one of those countries where EU citizens face double payment of registration tax and annual circulation fees," Farrugia said.

Farrugia also says that charging exorbitant annual circulation fees on cars older than five years is seriously flawed and unjust. "Paying a small premium is one thing, but paying very high amounts should be remedied. Using the environment as an excuse is groundless when a car passes the emissions test."

Between 1995 and 2002, Malta had the highest rate of vehicle taxation as a percentage of total taxation in the form of car registration tax among the 16 EU Member States that charge a registration tax. Nine EU States - France, Germany, Luxembourg, Sweden, Czech Republic, Slovakia, Estonia, Lithuania and the United Kingdom - do not use registration tax.

In 1995, car registration tax in Malta amounted to 6% of total taxation, while the EU-25 arithmetic average was 1.2%.

By 2002, the car registration tax in Malta was 3.7% of total taxation, still the highest rate among the EU-25, whose average went down marginally to 1.1%.