Costing our Mobility

published 19 April 2008

by Carmel Cacopardo

Later this year a proposal for the overhaul of the car taxation regime in Malta will be up for discussion. This has already been indicated in a pre-budget document. It was then stated that the matter was an issue to be viewed within the longer term.

At present, car taxation in Malta is geared towards revenue generation, even if with a slight environmental flavour. Subject to a number of exceptions, the tax a new car is subject to on registration varies between 50.5 per cent and 75 per cent charged on its value and increasing with engine capacity (Motor Vehicles Registration Tax Act – First Schedule). Used cars are subject to different rates. Charges payable for the renewal of car licences also vary with engine capacity.

Any change in car registration taxation could well commence by defining objectives. Change is being triggered by the need to tackle the discriminatory nature of the tax when applied to new and used cars. A second objective is the urgent need to define environmental credentials in the very early days of this Administration. A third objective would most probably be the achievement of a neutral effect in car taxation revenues, namely that changes made would produce no net increase in the quantum of car taxes collected.

A green objective would be to reduce the hidden costs of car use which are being paid by the whole community. Costs incurred are not just financial: environmental and social costs have to be factored into the equation too. A truly green reform would ensure that environmental costs are discouraged through eco taxation while ensuring that changes do not bring about undesirable social effects.

The environmental costs would be reduced through making the polluter pay at such a rate that he would prefer not polluting to paying up. Car registration taxes and renewal of car licences can be used as eco taxes to discourage the use of cars and encourage patronage of public transport.

An efficient public transport system in Malta and Gozo would also indirectly address the negative environmental impacts generated by cars. It would provide a reliable cost-effective alternative, hence also satisfying the social need of effective mobility for all, with reduced costs. I do not aim in this short space to discuss reforms to public transport but it should suffice for the time being to state that it is imperative that investments made in public buses give returns to the community whose taxes are financing it year in year out. Public transport should not be limited to public buses but should also include other forms like sea transport (in Grand Harbour and Marsamxett).

Within this context I would suggest a different objective for changes required to fiscal/environmental/transport policies: introducing efficient and effective mobility by encouraging the reduction of cars from our roads, improving air quality while simultaneously ensuring that the public transport system is really efficient and effective.

Obviously, car importers, car dealers and all those involved in car repair and maintenance as well as car insurance would not be too enthusiastic about such a proposal. A reduction of cars on the road will affect their business. A reduction of emissions will also improve our health through a reduction of respiratory diseases.

Transport has been identified by the 2005 State of the Environment Report (the last to date, published in early 2006) as one of the major areas negatively impacting our environment – in particular the quality of the air we breathe. Yet, in the last five years only one policy initiative has been taken on the matter: congestion charging (CVA – Controlled Vehicular Access) for cars entering Valletta. On its own, the positive impact of this initiative is minimal. Within the context of a general overhaul of transport policy its effect could be increased exponentially.

So the time is ripe to consider all the issues relating to our mobility in a holistic manner. Reform car taxation, encourage the reduction of cars from the road but, at the same time, ensure that our mobility is increased through an efficient public transport system in both Malta and Gozo. While having cleaner air to breathe we will be in a position to reclaim our streets and cut back on costs borne by the community! A radical overhaul of our transport policies is required. Reforming car taxation is just one building block in the whole exercise.

On March 11, a few minutes after the commencement of his new term of office, the Prime Minister invited all those having a genuine interest in the environment to cooperate with the government “to find the best way (forward) in favour of sustainable development”. Positive words which, though late in the day, can be an adequate foundation for the development of environmental policy in Malta. They can also serve to neutralise past mistakes which have derailed many a positive vision.