News | Sunday, 22 March 2009

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Labour faces €1 million bill

The Labour Party’s crusade for VAT refunds on cars bought after 2004 may end up in massive embarrassment and serious insolvency for the party, if its pledge to file thousands of separate law suits actually makes it to court.
Labour insiders were in panic mode last week, as over 14,000 individuals – rising to over 17,000 yesterday – queued outside the party headquarters at Mile End in response to the call for people to register to file a law suit against the government.
In the Maltese legal framework, ‘class action’ allowing for a collective case is not possible. Instead, each individual case would incur legal costs, which taken together may amount to an estimated €1 million.
However, it appears that party leader Joseph Muscat had overlooked the financial implications of representing thousands of individuals claiming for VAT refunds in court.
Beyond the publicity generated by the event, legal experts had already warned Joseph Muscat’s aides that for every individual claim for VAT refunds, the party would have to pay court fees proportional to the amount being requested.
With the expectations raised sky-high over the past days, Labour is now considering how to get out of this faux-pas, which would leave it in the red by more than €1 million... at a time when the party already faces serious financial problems.
This stark scenario also explains the government’s smug refusal to give in and fork out some €50 million in VAT refunds on cars, as it waits for Labour to bite the bullet and fork out the prohibitive court fees.
So far, the Labour Party is downplaying the extent of the upcoming court expenses, limiting its public pronouncements only to saying that it will take “one step at a time”.
“We’ve filed a judicial protest, and we will be letting the legal procedures take their course,” said PL secretary general Jason Micallef.
When asked what it will do once the government files a counter-protest, forcing the party to file thousands of lawsuits, Micallef was unsurprisingly evasive.
“We know we are morally right and nothing will stop us from getting the people to get their due refunds,” Micallef said.
Asked about the estimated €1 million figure, Micallef would not comment but attacked the PN for “trying to confuse people’s minds”.
“I’m sure we will win this case in the name of the people without having to resort to the kind of court action you’re mentioning,” he added. “We have a great legal team which knows exactly what to do.”
In the meantime, Finance Minister Tonio Fenech has reiterated the government’s position in saying that there was no moral or legal obligation to refund VAT on car registration tax.
Egging on Labour to go ahead with its court case, Fenech said that people had every right to sign up for the PL’s campaign, and that the government would respect the court’s decision.

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