Figuring out the pain
People seem to have become bone weary about the way the new water and electricity tariffs are and will be hitting them at the present level and basis. There is a widespread hope that the tariffs will at long last be reduced within the next few weeks,...
People seem to have become bone weary about the way the new water and electricity tariffs are and will be hitting them at the present level and basis. There is a widespread hope that the tariffs will at long last be reduced within the next few weeks, but little further interest in how they are calculated.
To make it worse, instead of receiving enlightenment from the Malta Resources Authority, the MRA is asking the public to guide it in a strange reversal of roles.
To date many bills have been issued with two months estimated on the basis of the old surcharge up to end September, and with October estimated according to the new tariffs. The bills give a comparative average daily rate, which few have used to demonstrate with Enemalta's own figures how bills will be shooting up.
Some writers of letters to the newspapers have commented about the regulations accompanying the tariffs, aside from their actual level. The unions have concentrated mostly on the eco measure aimed at minimising tariffs for low-level consumers who thereby contribute positively to the environment.
At the political level the Labour opposition has kept firing away at the government to withdraw the bills issued with the new tariff system incorporated in them. One cannot begin to imagine where it will all end up, and how. Particularly if the MTA does not straighten its back and introduce new sharpness in its eyes to come up with a fair formula that will, on the one hand, meet the government's objective of full recovery of costs, and, on the other hand, make sure that costs are recovered fairly. That formula in place, a fresh discussion can then take place on how to apply a bias towards eco friendliness on the basis of agreed household statistics, as well as how to help those least able to pay to ensure social justice. Meanwhile there will be some who continue to make their own calculations, like a reader of this column did.
The reader chose to contact me to ask me to expose his reasoning, rather than doing so through the letters columns. He pointed out to me that, under the regulations of the tariff system, the cost of new applications for the supply of water and electricity have shot up. The upward hike, he told me, was as follows:
Water for apartments where that service is already in place but do not have a meter - from €81.50 to €345 - a 323 per cent increase. Electricity under similar circumstances - from €163.05 to €300 - an 83 per cent increase.
Apart from being an absurd exaggeration, these charges, says the reader, will affect mostly first-time buyers of houses, precisely the category the government says it wants to encourage and to protect.
While at it, the reader examined the effect of the revised car registration costs. On numerous occasions last year, he wrote, it was said that those who bought cars in 2008 were to have the option to apply for the new registration system that came into effect in 2009. This should have meant that whoever bought a car bought during 2008 would have benefited from a refund that is calculated on the amount paid on the method of calculating the registration fee plus Vat prevailing under the old system.
This was put into effect, but the government is not giving refunds in cash. Refunds will instead take the form of deductions on a yearly basis when renewing one's car licence. The reader offered a practical example on the basis of his own experience.
The refund on a new car he bought during 2008 works out at €3,446. The offset on the licence applicable to his car, according to the new system, stands at €110 per annum. Which means that after 10 years only €1,110 will be "refunded" to him. In 10 years it could well be time to trade the car in the second-hand market, to go for a new one. Some people do that well before 10 years have passed, but let the 10-year assumption stand for the purpose of this exposition.
Under the new regulations the credit of the refund still outstanding will not be applicable to other cars registered in the same owner's name.
Nor will the outstanding refund balance be transferred to the present owner should he sell the car to a third party. End of story? Not quite. Any outstanding refund balance will be lost if the owner scraps the by now aging car.
This reasoning, the reader says, can be worked out from a document distributed to car dealers in November 2008.
In his case, he bought the car in October 2008. Like many other buyers, he took out a loan to finance his purchase, and has to service that loan at the going rate of interest.
In sharp contrast the government offers no interest at all on the balance of a refund remaining outstanding for a number of years as shown.
The reader seems to have more than a point in his favour. It remains to be seen whether the relevant authorities will challenge his reasoning and workings. Silence will not be an answer.
To make it worse, instead of receiving enlightenment from the Malta Resources Authority, the MRA is asking the public to guide it in a strange reversal of roles.
To date many bills have been issued with two months estimated on the basis of the old surcharge up to end September, and with October estimated according to the new tariffs. The bills give a comparative average daily rate, which few have used to demonstrate with Enemalta's own figures how bills will be shooting up.
Some writers of letters to the newspapers have commented about the regulations accompanying the tariffs, aside from their actual level. The unions have concentrated mostly on the eco measure aimed at minimising tariffs for low-level consumers who thereby contribute positively to the environment.
At the political level the Labour opposition has kept firing away at the government to withdraw the bills issued with the new tariff system incorporated in them. One cannot begin to imagine where it will all end up, and how. Particularly if the MTA does not straighten its back and introduce new sharpness in its eyes to come up with a fair formula that will, on the one hand, meet the government's objective of full recovery of costs, and, on the other hand, make sure that costs are recovered fairly. That formula in place, a fresh discussion can then take place on how to apply a bias towards eco friendliness on the basis of agreed household statistics, as well as how to help those least able to pay to ensure social justice. Meanwhile there will be some who continue to make their own calculations, like a reader of this column did.
The reader chose to contact me to ask me to expose his reasoning, rather than doing so through the letters columns. He pointed out to me that, under the regulations of the tariff system, the cost of new applications for the supply of water and electricity have shot up. The upward hike, he told me, was as follows:
Water for apartments where that service is already in place but do not have a meter - from €81.50 to €345 - a 323 per cent increase. Electricity under similar circumstances - from €163.05 to €300 - an 83 per cent increase.
Apart from being an absurd exaggeration, these charges, says the reader, will affect mostly first-time buyers of houses, precisely the category the government says it wants to encourage and to protect.
While at it, the reader examined the effect of the revised car registration costs. On numerous occasions last year, he wrote, it was said that those who bought cars in 2008 were to have the option to apply for the new registration system that came into effect in 2009. This should have meant that whoever bought a car bought during 2008 would have benefited from a refund that is calculated on the amount paid on the method of calculating the registration fee plus Vat prevailing under the old system.
This was put into effect, but the government is not giving refunds in cash. Refunds will instead take the form of deductions on a yearly basis when renewing one's car licence. The reader offered a practical example on the basis of his own experience.
The refund on a new car he bought during 2008 works out at €3,446. The offset on the licence applicable to his car, according to the new system, stands at €110 per annum. Which means that after 10 years only €1,110 will be "refunded" to him. In 10 years it could well be time to trade the car in the second-hand market, to go for a new one. Some people do that well before 10 years have passed, but let the 10-year assumption stand for the purpose of this exposition.
Under the new regulations the credit of the refund still outstanding will not be applicable to other cars registered in the same owner's name.
Nor will the outstanding refund balance be transferred to the present owner should he sell the car to a third party. End of story? Not quite. Any outstanding refund balance will be lost if the owner scraps the by now aging car.
This reasoning, the reader says, can be worked out from a document distributed to car dealers in November 2008.
In his case, he bought the car in October 2008. Like many other buyers, he took out a loan to finance his purchase, and has to service that loan at the going rate of interest.
In sharp contrast the government offers no interest at all on the balance of a refund remaining outstanding for a number of years as shown.
The reader seems to have more than a point in his favour. It remains to be seen whether the relevant authorities will challenge his reasoning and workings. Silence will not be an answer.