By George Psyllides
DIKO has filed a proposal to scrap road tax and raise the tax on fuel in a bid to create a “simpler and fairer” system for the public.
“The current system is unfair, complicated, and has many distortions,” DIKO MP and House Transport Committee chairman Antonis Antoniou said on Thursday. “With the proposed arrangement we want to have a simple and fair system for the people’s benefit.”
Antoniou said the proposal had many advantages since motorists would essentially pay the road tax in monthly instalments while filling their vehicle with fuel and not having to make a one-off payment, which in many cases people cannot afford.
The party’s proposal entails raising the fuel consumption tax by 9 cents a litre plus VAT. This would fetch the state some €81m, €20m less than the current system.
Antoniou said half the amount could be covered by savings in administrative costs, while the rest should be written off since they had been imposed in 2013 as part of the terms of the island’s bailout.
For example, a motorist who travels an average 15,000 kilometres per year with a fuel consumption of 3.5 litres per 100km, would pay €47.25, Antoniou said. Four litres per 100km would cost €54, €67 for five litres, and €101 for 7.5 litres.
“The road tax is unbearable and there must be tax relief. This is why we consider our proposal right and fair,” Antoniou said.
The party wants the proposal to go through the motions by the end of the year and implemented with the start of 2016.
The committee heard that from the 801,000 registered vehicles, 68,000 have been declared immobilised, while an additional 80,000 did not have their road tax renewed.
“You realise that many of these are on the roads without paying road tax,” Antoniou said.
But it would be easier said than done as MPs raised a series of valid questions that would need to be addressed.
AKEL MP Andreas Fakontis said his party believed that the negative aspects of the proposal outweighed the positives.
For starters, the arrangement would be unfair for professional drivers, travelling salespeople, and the disabled (who do not pay road tax), Fakontis said, and would also affect rural residents who commute to towns for work.
The fluctuations in fuel consumption were another important factor.
“It has been shown that fuel consumption displays major fluctuations based on the condition of the economy,” Fakontis said.
This would reflect on state revenues and “you do realise that a reduction in fuel consumption would effectively bring a further rise in the tax because the state, at the end of the day, needs the €100mln.”
The AKEL lawmaker also suggested there was a risk of motorists resorting to the occupied north for fuel and wondered what would happen when cars started using LPG.