26 November 2003

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Cars already on their way to Malta to face higher taxation

- second-hand car importers could face massive cash-flow problems

Of all the people or groupings that may have been upset by the measures to be introduced in this budget the second-hand car importers, will be among the most furious.
A decision was taken in the budget to increase the registration tax on second hand motor vehicles from 1 December, only a week after budget day and not, as is usually the case with budget measures, on 1 January.
This means that importers of second hand cars who may have taken orders from people at certain prices, or who have cars on their way to Malta, or on order, will have to pay the higher registration tax on all the cars that arrive after 1 December.
The Malta Financial and Business Times spoke to Dr Emanuel Mallia, the legal counsel and spokesperson for the association of second-hand car dealers (UVIA) who was furious about the budget increases. Mallia said he was taken by surprise by the decision to introduce the increase on 1 December.
Several importers of second hand cars had contacted him and complained about both the extent of the increases and the date. "Many of the importers are going to face severe cash-flow problems and some could even face bankruptcy. It all looks pretty disastrous," Mallia told this newspaper.
Mallia was particularly peeved at the very high increase for cars between 1300 and 1500cc, the most commonly imported. "The increase of Lm600 plus VAT is out of proportion with the increases in other ranges, and will be very damaging to business."
The increases in the other ranges range between Lm 130 and Lm300 except for the more powerful vehicles, with those between 2500cc and 3000cc to be subjected to a Lm400 increase and those above 3000cc, to one of Lm1,000.
The budget measure will have the greatest impact on lower and middle income groups likely to purchase a car in the 1300 to 1500 bracket and these will have to pay a higher increase than all those buying the more powerful cars except for those over 3000cc.
Asked whether he could accept the environmental argument for imposing the registration cost increases on second hand vehicles, Mallia did not hesitate: "Not at all. The second hand vehicle importers have their products tested to very high safety and emission standards accepted by the UK ministry of transport. The environmental arguments simply do not hold."
Over the past months there has been a high profile battle of words between the importers of second hand cars, represented by Mallia and importers of new motor vehicles represented by Dr Georg Sapiano.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
Tel: (356) 21382741-3, 21382745-6 | Fax: (356) 21385075 | E-mail