CARS will be significantly cheaper from today after Parliament yesterday voted into law a bill lowering tax rates on new and second-hand vehicle. The new law is aimed at opening up the market on the island and bringing it into line with the rest of the EU.
The vote was unanimous with the sole exception of Green Party leader George Perdikis, who objected on environmental grounds.
Communications and Works Minister Harris Thrassou said that, “every Cypriot must have the right to a cheap motor vehicle, without taxation being a factor in the choice.”
The Motor Vehicles Importers Association welcomed Parliament’s approval saying it is, “a big step in the right direction of modernising the island’s car market. The change in the law doesn’t solve all the problems though, and we call for better quality and safety inspections and the abolition of the consumption tax, as well as more environmental measures such as regulating emissions.
According to the bill, there will now be four taxation categories instead of the previous six.
For new cars up to 1650cc, the rate of taxation is coming down to 30 cents per cc, effectively meaning a saving of between £290 and £908. Between 1650 and to 2250cc, the rate is £2 per cc (down from between £2.70 and £2.85).
The rate goes up to £3.50 for an engine between 2.25 and three litres, down from the previous brackets of £5.50 and £8. Cars over three litres will now be taxed at £4.50 per cc, a 44 per cent decrease.
Pick-up trucks will be subject to a taxation rate of 15 cents per cc irrespective of engine capacity, down from 50c.
Motorbikes up to 600cc will not be taxed. Between 600 and to 1000cc, the rate is £1 per cc, rising to £1.50 for bikes above 1000cc.
The policy on used cars is also changing. Currently, cars over six years old are taxed at 25 per cent over the regular rate but that is set to change. Under the new bill, used cars will face tax rates which decrease with the passing of every year, up to an 85 per cent discount for a nine-year-old car.
The Finance Ministry said that although, in theory, revenue from taxes will be less, the expected boost to the market will cover any losses.
