The Labour Party said today that a European Commission decision to stop the infringement procedure that had been brought against Malta over VAT charged on vehicle registration tax under the old system confirmed its view that the system had been irregular.

The Commission said it had lifted its infringement procedure because Maltese law had since been changed.

The PL said that the government, in changing the law, also confirming that the way VAT was charged on registration tax between 2004 and 2008 was illegal.

It hoped that the government would not continue to drag its feet in the court proceedings which had been instituted on behalf of 17,000 consumers who were seeking a refund of the VAT which they had paid.

Earlier, the Finance Ministry said the current car registration tax, which came into effect on 1 January 2009, introduced environmental considerations into the tax system to encourage the use of smaller and environmentally cleaner cars.

"The Maltese Government is pleased to note the positive effects which the current car registration tax has already had since its coming into force namely the reduction of prices for smaller and cleaner cars and the reduction in the average age of second hand cars being imported into Malta."