Government wants 18,000 reasons for class action

The government yesterday fought back against the Labour Party's class action over VAT charged on vehicle registration by asking that each of the 18,000 people represented declare how they had been wronged.

The procedure means the case could turn into an unwieldy nightmare for Labour (PL) and lawyer Ian Refalo, representing the government together with Deputy Attorney General Peter Grech, insists there appear to be anomalies in the long list of people claiming compensation over the VAT they have been made to pay.

In particular, Prof. Refalo said yesterday there were some entries in which individuals were trying to claim the VAT back on behalf of companies and others where the complainants had purchased their car in 1996, which, he said, would disqualify them from making the claim.

The controversy over the VAT paid on car registration erupted last February when EU Taxation Commissioner Laszlo Kovacs said it was not in accordance with European community law.

The PL maintains this means that VAT on registration charged by the government after EU accession in 2004 is illegal and, therefore, should be refunded.

In the last budget, the tax regime changed and, since January 2009, VAT is no longer charged on registration tax of vehicles. But Labour is insisting the government should refund the €50 million it charged in the intervening period.

The PL said the lawyers representing the government had presented formalistic and procedural pleas that had already been presented in the government's original reply to the suit. Moreover, the party said that, in essence, the request meant that each case had to be heard separately, which would substantially increase the time taken for proceedings to take place.

Lawyers Anġlu Farrugia, the party's deputy leader, Chris Cilia and Alex Sciberras, appearing for the PL, argued that the procedures should be practical and should treat the merits of the case.