If the government had to reimburse VAT levied on the registration of vehicles, it would cost Malta about €50 million, in a worst case scenario, Finance Minister Tonio Fenech said yesterday.

However, he stressed it was only the European Court that could declare the imposition of VAT on vehicle registration as illegal and the Maltese government was sticking to its position that it was not.

Mr Fenech said that after the European Commission published its reasoned opinion a year ago on the matter, the Maltese government amended the registration tax system. Once the situation had been changed and corrected, the Commission did not normally proceed with a court case.

He said that, should any individual decide to claim VAT refunds, the government would argue, as it did over the years, that no law was broken and this was not a tax on tax because registration was paid by the importer and VAT by the consumer.

He pointed out that the European Court had decided two cases, one against Denmark and one in favour of The Netherlands. Malta insisted the Dutch case was closest to its situation and, even if the European Court of Justice declared the collection of VAT was illegal, there was no guarantee it would order a refund.

Labour economic affairs spokesman Gavin Gulia accused the government of playing for time and trying to find a loophole so that it would not need to reimburse motorists for VAT paid on registration tax since Malta joined the EU in 2004.

Dr Gulia said EU Commissioner Laszlo Kovacs confirmed that consumers had a right to sue the government for reimbursement of VAT, which was charged in "an abusive manner".

The government's excuses not to reimburse motorists showed it considered Malta to be just a part-time EU member, despite the rights people were promised. The government should immediately launch a scheme to refund the people, without recourse to the courts, he said.