Cyprus vehicle importers are unhappy over the delay in the approval of two law amendments, that would change the calculation of consumer and road tax fees, are adversely affecting car sales.
Official data shows car saloon sales decreased 4.6% in February to 2,887 from 3,025 in February 2018. In January, the decrease was 6.4% compared to the same month in 2018.
The two bills were expected to go for a vote on 1 March, but voting was postponed until 15 March, as MPs introduced a large number of amendments.
The Cyprus Motor Vehicles Importers Association (SEMO) said a delay in voting – to do with the elimination of the consumer tax on car sales and road tax linked to the country’s compliance with EU guidelines on pollutants – has caused confusion amongst potential buyers.
“People planning to buy a car are stuck as they do not know what taxes they will be asked to pay if either of the laws passes during the time between them placing the order and actually registering the car,” said SEMO’s Alexis Anninos.
He said that overall car sales have stagnated and the only reason the market has not recorded a greater drop is because car rental companies have renewed their fleets.
He argues the market was already distorted by the existing consumer law which favours older used cars.
“The way the current consumer tax law was designed saw a lower tax on older cars. The older the car the lower the tax. The law is like this, although probably unintentionally, encouraging people to prefer older used cars,” said Anninos.
Sales of new cars were just over 30% of all sales for 2018, while the rate of new cars to used cars sold in February was at a ratio of 30.8% to 69.2%.
Anninos argues delays are causing further distortion of the market as people thinking of buying a new car are hesitant as they are not sure whether they should wait for the law to pass.
“When people think that they will be able to buy a car with a couple of thousand euros less from the abolition of the consumer tax and save some hundreds more on road tax, then it is only natural that they will want to wait. However, this uncertainty has been dragging on for months.”
Anninos said that, despite the fact that the association is quite rightfully putting forward the argument that the sales of new cars are suffering, their focus is on the environmental side of the aspect.
He emphasized that Cyprus will finally have to comply with European regulations on car pollution and calls on MPs to back government bills for the protection of public health and the environment from increased emissions.
“As an association, we are working closely with the government to introduce new measures which will reduce the country’s emissions in transport. We are all for a combination of increased fees for polluting vehicles, along with significant incentives to purchase cars which are friendlier to the environment.
Newer cars are equipped with technology which either makes the car more fuel efficient or filter emissions. In any case, the result is less harmful emissions being released into the atmosphere.”
Anninos said that the common goal of all stakeholders should be the reduction of pollutants in the air which we all breathe.
In the calculation of fees, the law amendments foresee them based on pollutant emissions such as European Union anti-pollution standards combining the pollutant factor with the age of the vehicles.
Postponement of the vote has irked ruling DISY, as it fears this will only prolong the uncertainty in the new car market.
Urging parliament not to postpone the vote last Friday, DISY’s chairman Averof Neophytou said citizens are the victims of “games being played behind their backs”.
Buyers trapped
He said that parliament should have dubbed the bills as urgent as there are “thousands of fellow citizens who have ordered cars since December and are stuck, as they are dependent on when we will decide to vote for or against the law”.
Calling on his fellow MPs to put the bills to the vote he stressed that thousands of citizens are being punished.
Reminding that the whole philosophy behind the two laws is to bring down pollutants emitted by cars, Cyprus Greens MP Charalambos Theopemptou told the Financial Mirror that Cyprus is having a hard time meeting its EU 2020 environmental targets with transport emissions amounting for 43% of the country’s CO2 emissions.
Addressing the reasons why MPs had sent back to the government a bill aimed at tackling the issue of emissions, Theopemptou said that bill had been met with criticism as they found that it does not address the problem of dirty emissions from mainly old cars.
“While the government tried to tackle the issue with the introduction of a scaled registration fee and road tax scheme which would, in theory, see car owners pay according to the amount of pollutants emitted by their vehicles, they failed as they over-emphasised the car’s age factor,” said the MP.
He said if the bill had passed, Cypriots would have been forced to pay in some cases €2-3,000 upon the car’s registration and a few hundred euros annually for the road tax as the older the car, the higher the cost.
“What needs to be done is to draw up a bill which will penalise the actual pollution caused by the car. We do not have a problem with owners of cars with high emissions paying a hefty registration fee or road tax, but even this should be introduced gradually, giving incentives to people to change their cars,” argued Theopemptou.
He explained that someone can import a lightly used secondhand car which may emit fewer pollutants than many newer cars, pointing out that there is no nearly-new car market in Cyprus.
He revealed that his party along with AKEL have prepared an amendment which if included in the final draft, will see a scaled fee chart, with owners of hybrid and electric cars paying registration fees and road taxes close to nothing.
Theopemptou added that the amendment also sees luxury cars that are more harmful to the environment carrying a higher registration and tax fee.
“Fees and road taxes collected from these cars can be used for incentive plans to encourage people to buy hybrid and electric cars, instead of just newer cars.”
Meanwhile, Parliamentary sources told the Financial Mirror that a new delay is possible as MPs have not discussed a large number of amendments proposed to the bill.
Amendments were to be discussed at the House Transport Committee on Thursday, but the issue was removed from the agenda, according to the same sources.
