Motorists have to apply every year to benefit from the car VAT payback scheme, with Edward Scicluna blaming the Brussels bureaucracy for the inconvenience.

Speaking on One TV breakfast show yesterday, the Finance Minister said the yearly application was necessary because of the EU’s deficit rules.

The scheme announced in the Budget will refund VAT paid on vehicle registration tax between May 1, 2004 and December 31, 2008.

Motorists will receive an ex gratia payment spread out over seven years, equivalent to the VAT they paid on new or second-hand imported cars bought in the period.

The tax was deemed to go against EU regulations and the law was subsequently changed in 2009.

The cost for taxpayers over the seven-year period will be €31 million, with €3.5 million allocated in the Budget for this year.

However, Prof. Scicluna explained that unless motorists applied each and every year to benefit from the scheme, the government would have had to include the global sum in this year’s Budget.

“This would have sent our deficit target haywire,” he said.

Refunding motorists was a pledge made by the Labour Party soon after Joseph Muscat was elected leader in 2008.

Some 40,000 people will receive a total of between €500 and €1,000 with the average being €771 over the seven-year period.

Transport Malta has extended the deadline for applications to April 4.

ksansone@timesofmalta.com