DIKO deputy Nicos Pittokopitis yesterday called on political parties to show their true colours and take a stand on the abolition of road tax, to be replaced by a three-cents-per-litre surcharge for fuel consumption.
Pittokopitis, who also chairs the House Communications Committee, will today be re-tabling his draft bill for scrapping the levy.
Conventional wisdom says it would be impossible to do away with the tax without transferring it onto something else. And since road tolls do not exist in Cyprus, the only obvious alternative would be to mark up the cost of fuel.
The government makes around £44 million from the levy, but statistics show that more than 10 per cent of motorists fail to renew their road tax, meaning the state loses millions in revenue every year.
Changes in the car tax regime introduced in November 2003 caused an outcry by making regular passenger vehicles and their road tax cheaper while proving very costly for specific groups.
For instance, the owner of a four-litre SUV was forced to pay between £450 and £500, even if the vehicle was 18-years-old.
Low-income groups who did not benefit from the low car prices still had to pay a lot on road tax if their vehicle’s engine was two litres and above.
Then late last year the government announced that senior citizens only would get a break on their road tax provided a vehicle (over 2000cc) was registered in their name prior to 2003. However, it has since emerged that the regulation is far too labyrinthine for its own good, with several people writing to the Mail to complain that they were paying far more than the £195 ceiling promised.
One disgruntled pensioner said this week he had been given a paltry 0.46 per cent discount on his road tax. This was because in 2003 he had paid £461 based on the weight of his car, and this was reduced in 2004 to £459 under the new scheme based on engine capacity. The man was informed by the Road Transport Department that, having received a discount, he was ineligible for the £195 fee.
Pittokopitis claims his three cents a litre proposal involves a great deal of benefits: it will eradicate bureaucracy, put an end to the inconvenience of the public and achieve a fairer distribution of the indirect tax for the use of roads. Moreover, the state would cut on operational costs.
According to a study commissioned by DIKO, with the three cents surcharge a family spending up to £50 pounds a month on fuel would bear an additional £36 burden per year. Households forking out £100 would pay an additional £72 a year, and so on.
Pittokopitis said households stood to gain immensely from the abolition of road tax, with some families saving up to 45 to 60 per cent a year.
Citing official figures, Pittokopitis said the government would in this way also stamp out tax evasion, and would be able to generate income from use of rental cars. This extra money (estimated at £2.5 million) could in turn be channelled into a special fund and used to subsidise professional groups, such as taxi and bus drivers, who use the roads far more frequently than the average person.
The debate on whether to get rid of the duty has been raging on and off for two years now, with opponents dismissing it as either a populist or ineffectual measure.
“It’s time for certain people to stop hiding behind their finger,” Pittokopitis said, pledging to bring his bill before the House plenum today.
“We first suggested this 22 months ago, so how can anyone say it is a gimmick ahead of the parliamentary elections?”
Pittokopitis’ proposal appears to have the lukewarm backing of DISY, which previously had opposed the idea, arguing that the last thing consumers needed was another levy. AKEL is against the bill.
Still, the main opposition party said yesterday it held certain reservations. The party’s no.2 Averoff Neophytou described the bill as a “modern proposal”, but added DISY was worried lest this involved imposing a stealth tax.
Neophytou elaborated: “Over the past couple of years, the government has bled the people dry, raking in around half a billion pounds from fuel consumption tax. I wonder, with all this money perhaps they could have abolished the road tax without the need to replace it with another surcharge.”
