The Labour Party yesterday upped a notch in its crusade against VAT paid on car registration tax when it initiated a court case on behalf of almost 18,000 people.

The government did not react to a judicial protest filed by the Labour Party (PL) on May 3, a move which prompted the party to go ahead with the court case.

One of the party's lawyers said the case cost less than €800 to file, a minor sum when one considers the €8,000 Labour received in donations on the back of its campaign.

The PL lawyer explained that the law allowed for the individual cases to be heard as one case because they all dealt with the same matter.

Labour leader Joseph Muscat said the Prime Minister had "ignored" the 18,000 people who were unjustly charged VAT when he chose not to reply to the protest.

Addressing the media outside the law courts, Dr Muscat said the party believed the consumers had a right to be refunded this "illegal tax".

Dr Muscat said that if it lost its case in Malta, the PL was prepared to go to the European Court. A Labour government, he said, would be willing to give a refund to all those who were charged VAT on their vehicle registration tax between 2004 and 2008 and not just the people who were party to this case.

Consumers had a right for the refund, in the same way as they deserved to be compensated for the bad state of the roads, he added.

It was EU Taxation Commissioner Laszlo Kovacs who said that VAT levied on car registration tax was contrary to European community law in a reply to a parliamentary question by Labour MEP Louis Grech this February.

The original complaint with the Commission had been filed in 2007 by Mr Grech and Dr Muscat, then still an MEP.

The court case was signed by lawyers Chris Cilia, Alex Sciberras and deputy leader Anġlu Farrugia.

Between 2004 and last year the amount of VAT charged on car registration tax totalled about €50 million.

ksansone@timesofmalta.com