Tax on imported cars - sounds familiar. There are car plants for most makes of cars here, the largest is the BMW plant which exports 90% of its production. If you import a car, then there is duty (35%), ad-valorem (12%) and VAT (14%). Still, 2-year old cars from Japan work out far cheaper than a locally sourced equivalent.
I don't see that you need 16" or 17" wheels. If you were going to change, them I am sure 15" would be adequate. You may find that the dealer makes more money on larger tyres and rims, hence his recommendation.
Looking at Gumtree for used Jazz, there are 35 for sale. A 2008 model, which seems to be the most popular used car year, is asking R 110 000 (£9000). Very good resale value, in the top 5 (Toyota Corolla is still no 1).
Apart from the poor roads, what else is there about Malta that is attractive?