The worst in Europe: vehicle taxation in Malta

Contrary to the declarations made by the current administration in which it proposed to make Malta the best in Europe, when it comes to vehicle taxation as a percentage of total taxation Malta remains the worst in Europe according to the 2016 edition of “Taxation trends in the European Union”, published by the European Commission, Table 70, page 277. (http://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/gen_info/economic_analysis/tax _structures /2016/ econ_ analysis_ report _2016. pdf)

In 2014, the first full year of this administration, vehicle taxation in Malta as a percentage of total taxation was 3.5 per cent, while the EU 28 average was 1.3 per cent. The Euro Zone Area 19 average was 1.2 per cent!

This means that vehicle taxation in Malta is almost three times as much as the EU average.

In Estonia and Lithuania vehicle taxation was 0.2 per cent of total taxation and they ranked first and second respectively in the EU. This means that vehicle taxation in Malta is 17.5 times as much as vehicle taxation in Estonia and Lithuania.

In Cyprus, vehicle taxation was 6.4 per cent of total taxation in 2002, the same amount as in Malta. But in 2014, vehicle taxation went down to 2.1 per cent! Cyprus currently ranks seventh worst in the EU – 40 per cent better than Malta.

In the United Kingdom, vehicle taxation as a percentage of total taxation is 1.8 per cent, practically half that of Malta!

Vehicle taxation in Malta has been the worst in the EU for several years, having been 6.7 per cent of total taxation in 2003.

Over the past 10 years, vehicle taxation in Malta has been going down practically every year, with the exception of 2011 when it remained at 4.2 per cent as in the previous year.

In 2014, it remained the same as in the previous year at 3.5 per cent. In real terms, the total amount of motor vehicle registration tax and annual circulation licence fees (taxes) increased from €81.9 million in 2013, to 94.5 million in 2014.

It is clear that total taxation in Malta increased proportionally in 2014 for the ratio between vehicle taxation and total taxation to remain the same as in 2013.

The Malta Automobile Club had launched a petition to reduce vehicle taxation in October 2013, but it is evident that this petition has fallen on deaf ears!

https://www.change.org/p/honmr-joe-mizzi-reduce-vehicle-taxation

Given that the economy is doing so well, what is keeping the government from reducing vehicle taxation? Apart from EU funds, the government will be collecting more than €140 million in duties and taxes from petrol and diesel this year, and it is also collecting several million euro from the Individual Investment Programme.

To add insult to injury, the government is allocating a very small percentage of vehicle taxation to investment in road construction and improvements.

We do not need the Spanish consortium INECO-Systematica to tell us how much investment in road building and improvements we need to reduce traffic congestion. The government needs to invest a higher proportion of the vehicle registration tax and the annual circulation tax in the construction of roads and maintenance works.

In 2005, the European Commission proposed the abolition of vehicle registration tax, and a number of EU Member States have removed such a tax. In Austria, Bulgaria, Czech Republic, Estonia, Lithuania, Luxembourg, Poland, Slovakia, Sweden and the United Kingdom there was no registration tax in 2012.

Here in Malta we have double taxation on motor vehicles, in some cases at very high rates, while the service in road construction and improvements is also the worst in the EU.

In 2017, the government estimates €116.6 million in revenue from vehicle taxation, €8.6 million more than 2016. On the other hand, it is estimating an expenditure of only €14 million in road construction and maintenance in 2017, just €1 million more than 2016, apart from other EU funds.

What is the government doing with the difference of €102.6 million that it is collecting from Maltese consumers? Maltese drivers and car owners need to wake up and instead of complaining about road congestion, realize what the root cause of the current situation is.

Perhaps the time has come for our Cabinet Ministers and Parliamentary Secretaries to start paying for vehicle taxation from their own pockets to realize how high vehicle taxation is in Malta!

www.facebook.com/Malta-Automobile-Club-484683321570286/

Alfred A. Farrugia President of the Malta Automobile Club