UPDATE 3: PL to challenge VAT on vehicle registration tax - ministry hits out at Opposition 'irresponsibility'
(Adds Alternattiva Demokratika statement calling for court action, PL counter-statement)
The Finance Ministry this afternoon criticised comments by PL leader Joseph Muscat that his party would pay for court action to challege VAT charged on registration tax. It said the PL was continuing to be irresponsible when it gave the people the impression that they had a right VAT refunds on vehicle registration tax.
The ministry said the Opposition was continuing to twist what Commissioner Kovacs said earlier this week. It was giving the people the impression that they had an automatic right for a VAT refund but neither the European Commission, nor the European Court, had said that the government should reimburse any money.
Dr Muscat’s comments today showed the Opposition’s deception, the ministry said. The Opposition had for days been saying that the government had been ordered to reimburse VAT, but it was now admitting that this had to be decided by the courts.
At a time when all the world was seeing how it could invest in industry, tourism and education in the face of an international crisis, the Opposition wanted the government to fork out millions which no judicial authority had said should not have been collected.
The Opposition either wanted the government to impose new taxes in order to recover those €50 million, or it wanted that amount reduced from incentives to boost investment and create jobs. This, the ministry said, was nothing but irresponsibility.
Earlier, Dr Muscat said the Labour Party would pay for and support court action to force the government to reimburse VAT paid on vehicle registration tax since Malta joined the EU.
Speaking during the launch of the electoral campaign of Maria Camilleri, a candidate in the European Parliament elections, Dr Muscat insisted that the government could not charge VAT on registration tax, and this had been confirmed by EU Taxation Commissioner Laszlo Kovaks last week.
The commissioner had also said that anybody could challenge the government in court, a comment repeated by Foreign Minister Tonio Fenech.
Dr Muscat said the Labour Party would therefore provide its assistance, including financial help, so that a number of people could take the issue to court, since it would be too expensive for people to challenge individually. He said anyone was welcome to join the class action.
In a reaction to the government's 's statement, the Labour Party said that if the people were irresponsible to seek their rights after having been charged an 'illegal' tax, then this government was seeking to deny the people basic European rights.
It accused the government of arrogance and said it had been warned for three years that VAT on registration tax was wrong.
Alternattiva Demokratika this afternoon also urged individuals to challenge government's "illegal" levying of VAT on motor vehicles registration.
Party leader Arnold Cassola welcomed Commissioner Kovács’ declaration that VAT should not be levied on the registration tax of cars.
He said individuals who were interested in mounting a challenge against the government's tax should contact him on [email protected] in order to protest this continued infringement and seek redress.
Finance Minister Tonio Fenech insisted last week that no community law had been broken, and it was the European Court which could ultimately decide if any law was broken.
In a worst case scenario, he said, reimbursement would cost the Maltese government €50 million. The European Court has decided two cases so far, giving different decisions against Denmark and in favour of The Netherlands. Malta held that its case was closest to that of the Netherlands, Mr Fenech said.