THE GOVERNMENT yesterday announced a study into the feasibility of altering import taxes on cars after press reports revealed Cypriots pay much more for their cars compared to the rest of Europe.
A survey recently carried out by Politis newspaper found that Cypriots pay 42 per cent above the EU average, or 62 per cent if you apply the purchasing-power parity (PPP) method. In all car categories – above and below 1600cc – Cyprus was the most expensive (or second, trailing Denmark), in absolute terms. Luxembourg had the best deals, with car prices there exponentially lower than Cyprus.
To get a hint of how much Cypriots must fork out, an Audi A6 (2.4 lt.) here costs 87 per cent more than the EU average, while a Toyota Avensis (1.6 lt.) is 35 per cent more expensive.
The EU aims to gradually reduce consumer taxes in member countries to achieve pricing convergence. But current disparities among European countries – expected to grow further with the bloc’s upcoming enlargement – may mean this goal will take some time in achieving.
Minister of Communications and Works Kikis Kazamias confirmed to the Cyprus Mail that his ministry was conducting a study on all parameters relating to automobiles: market price, fuel price and road tax fees.
While he conceded that public perception was that car prices were too high, Kazamias was quick to add that other factors should also be taken into account when comparing with other countries.
Petrol costs less in Cyprus than anywhere else in Europe, both in absolute and PPP terms. Fuel prices are largely subsidised, a practice not tolerated by EU policy. The government has said this will have to change, meaning fuel prices will go up.
Kazamias did not comment on whether lower-capacity cars would be made cheaper, as widely reported in the press; but he said whatever “losses” the government might incur in lowering taxes in one area, it would make up for in another. An estimated £70 million goes into government coffers every year.
From now on road tax will be calculated on the basis of horsepower, not car weight, in a bid to introduce a fairer and controllable system. The press has been speculating that road tax fees will be lowered for 16-18cc cars, as an incentive to consumers to buy environment-friendly vehicles.
Kazamias said the ministry’s study should be completed in the next few weeks. He explained the study would result in a recommendation being made to the Finance Ministry, which would be responsible for drafting a salient bill.
The new law would have to be passed and implemented by January 1, 2004, the deadline set by EU directives.
