Departing tax

The clear announcements in the Nationalist Party electoral manifesto to remove the departure tax altogether and to replace the car registration tax are welcome news indeed.

Equally welcome are the removal of the credit card levy, the obsolete TV licence fee and the removal of tax on inherited homes. But I will focus on the first two.

My views on both the departure tax and car registration tax are well known. I have repeatedly made them clear in this column and a quick search reminded me that, over the past three and a half years, I have written no less than four times about departure tax and as many as seven times on car registration tax.

On departure tax, the manifesto states in no uncertain terms that "following the reduction of departure tax, two years ago, from €46 (Lm20) to €23 (Lm10) per person, the country is now in a position to remove this tax altogether in order to ensure that Maltese citizens benefit from a greater freedom of movement in Europe and in other countries".

On car registration tax, the PN manifesto states that "car registration tax will be replaced by a system based on the polluter pays principle. We want to address the problem of traffic congestion and air pollution and reward all those who own cars that pollute less. This reform will lead to a reduction of tax on new vehicles but will mostly reward those who own cars that pollute less and those who shift to cleaner energy. This reform will apply to those who purchase a vehicle and not to those who already own a car".

Readers will not be surprised to learn that I strongly welcome and endorse the PN electoral commitment on both these counts.

Departure tax has long been an issue and would, in any case, have landed us in the European Court of Justice later this year. This announcement now means that we do not have to go that far and the matter can be resolved without taking the infringement proceedings further.

It is not so much the quantum of the tax that matters in this case as much as the principle at stake. Freedom of movement is a basic pillar of EU citizenship and removing this tax will strengthen our right to move freely within the EU. More so for our society that lives on an island with no real means to travel abroad other than by catching a plane. The issue with car registration tax was somewhat different because it stands to reason that some tax element on the purchase and use of cars must apply. The problem is that, in our case, the tax levied is high and also contains discriminatory elements (in the case of second-hand vehicles) which fall foul of EU law.

It is now clear that both these issues will be addressed under the new system that will be based on the polluter pays principle.

This means that the overall tax burden on the purchase of vehicles will be reduced whereas those who go for cleaner cars will get the better deal.

It is important to note that the new system will only apply to new purchases. This means that those who already own a car will not be affected.

True, these electoral commitments are an acknowledgement of what is rightfully ours. And, yes, they may have been delivered earlier. But they remain a step in the right direction and there is now a firm commitment to deliver them.

On the other hand, the Labour Party manifesto contains no equivalent commitment on these two taxes. The MLP manifesto only proposes to waive departure tax in the case of local artists who travel abroad to participate in concerts, festivals and art exhibitions. That's it. Under Labour, departure tax will remain for the rest of us.

Equally no reference whatsoever is made to car registration tax and no commitment to change it at all. Under Labour, car registration tax will not change.

As a minimum, I would have expected a party that has criticised the government on both these taxes to put its money where its mouth is.

Perhaps I expected too much.

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