NEWS | Wednesday, 26 November 2008

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The Ministry of Finance has stood by its proposed rates of registration tax for cars, even though the taxation levied on cars fuelled by both petrol and electrical energy – or hybrid engines – is set to increase.
An exercise by MaltaToday revealed that the registration tax on green cars such as the Toyota Prius and Honda Civic Hybrid, will increase by at least €2,000 because of the new vehicle registration tax.
The new tax is based on the carbon dioxide (CO2) emissions and length of the car, and is aimed at levying a higher tax on larger cars with higher CO2 emission levels.
Previously, registration tax was based on the capacity (cc) of the car’s engine.
Hybrid cars will lose their preferential flat-rate tax of 16.5%, and instead will be taxed according to their emissions and length come 2009.
“The new legislation is based on the ‘polluter-pays’ principle. The tax provides greater incentive for smaller, newer, less polluting vehicles, independently of the technology which they use. Vehicles which do not emit any carbon dioxide will pay a zero registration tax on the emissions component of the registration tax,” a finance ministry spokesperson said when asked about the increase in tax for hybrids.
However, the spokesperson added that hybrids would still be more expensive than smaller or cleaner cars.
“Hybrid cars should be much cheaper within the same range and category of cars, however with the principle of the polluter-pays, they should not be cheaper than cleaner or smaller cars.”
Hybrids will in fact retain the edge on the same category of large and small family cars, with their lower emissions keeping their tax down when compared to similar cars and their emissions.
But the formula devised by government to calculate the tax, is evidently higher than it previously was. It is arguable that their previous 16.5% rate of taxation was even more favourable than anyone could have ever expected.

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