The government's "lethargy" to replace the car registration tax system is destroying the car business due to lack of orders, Labour's spokesman for the economy and self-employed Gavin Gulia said yesterday.

Consumers were waiting for the current system to be replaced Dr Gulia said, citing a statement made by the Association of Car Importers last week.

He said the government had announced it would replace the current system in the coming budget but businesses could not take any more delays and were expecting to be given detailed information immediately.

Finance Minister Tonio Fenech said that the government had committed itself to reviewing the current system. He said that smaller, cleaner and newer vehicles would stand to benefit.

Vehicles registered since January 1 would have the option to migrate to the new system and any refund due on extra registration tax that would have been paid would be credited against the annual circulation fees.

"While the government acknowledges the fact that there is an expectation for the new system to be implemented at the earliest possible (opportunity), any serious reform can only be presented after the necessary studies and consultation have been carried out," Mr Fenech said.

Extensive consultation with all the stakeholders involved had been carried out, he said.

The Association of Car Importers took part in these discussions.

The government is now finalising the technical and legal aspects of the new system, including the valuation of imported used vehicles and the setting up of an IT structure that is expected to support the new system.

The draft of the new system would be presented to the stakeholders for final review and would be in presented in the budget speech, he said.