Labour MEP Joseph Muscat has welcomed reports that the government intends replacing the Vehicle Registration Tax with an Emissions Contribution in line with a European Commission Proposal.

" I welcome this long overdue announcement, given that I have been campaigning for this change for the past three year.  Nevertheless, I am disappointed that this declaration is coming so late in the day with the government spending months resisting the proposal rather than seeking to implement it.  It is now being said that the change will take place over a three-year period after the next elections, which leads one to question whether government has really changed its mind on the issue or whether this is yet another pre-electoral vote catching exercise," Mr Muscat said.

"One needs to wait for the tax rates to be announced before giving a definite analysis of government's proposal.

"In the meantime, there is a more impending issue that cannot be further sidelined by the government, namely the levying of an 18% VAT on the Vehicle Registration Tax.  This practice goes against European Union rules and the government has already been given a warning by the Commission" Mr Muscat said.

The removal of the VAT element would lead to a decrease of between Lm250 and Lm1,000 on the price of vehicle.

Mr Muscat said he held that  those who had bought a car since 1 May 2004 would also be eligible for a refund on the VAT element.