THE NEW tax proposals on cars look set to benefit consumers who will be able to buy new environmentally friendly cars at prices that are 19 to 21 per cent cheaper. But the proposals are also likely hit hard the market for all-terrain diesel vehicles.
Communications and Works Minister Kikis Kazamias would neither confirm nor deny reports in yesterday’s press identifying details of the new tax proposals put together by the Communications and Finance Ministries. He said the proposals would become public after the cabinet approved them and they are submitted to the House of Representatives on Thursday.
According to yesterday’s reports, changes in the taxation of cars will be based on the engine capacity instead of its value. Another proposal will also affect the calculation of registration costs and road tax, reportedly making them cheaper for motorists.
Under the reported tax proposals, import duties will be reduced by between 35 and 74 per cent, translating into a price reduction of between 19 and 21 per cent for consumers. The greatest cut will be for small and medium engine-sized cars, although substantial cuts are expected in most vehicle-types.
The worst hit will be the four-by-four all-terrain vehicles, which up until now had more favourable taxes.
Car sales have plummeted in recent months because of speculation that cars could become cheaper with duty cuts ahead of EU accession, plunging the market into a crisis that dealers have complained will be difficult to overcome.
Government delays in introducing a new tax package for cars, and rumours that car prices could be reduced by up to half, have resulted in people holding back until cars become cheaper next year.
The new tax proposals will at least provide some certainty to the car market. However, the New Horizons party yesterday warned the government to prevent oligopolies from forming between car importers. Without healthy competition in the marketplace, it said, the tax cuts could be swallowed up by importers instead of benefiting consumers. The Competition Commission has a role to play to ensure that the tax cuts translate into reductions in the final price, they said.
