Euro 5 car registration tax will be reduced by a maximum of 30 per cent while Euro 4 car registration tax is increased by an average of 10 per cent, Finance Minister Tonio Fenech announced this evening.

During the 2013 Budget speech, Mr Fenech said that the tax rate on N1 commercial vehicles would be reduced by 12.5 per cent to incentivise purchase of new cars .

The €500 euro scrappage scheme for new private or commercial (N1) cars on scrappage of older vehicle would remain in place.

Registration tax on motorcycles with 250cc engine and 25% reduction on other engine capacities will be removed, and there will also be a removal of registration tax on classic cars aged 50 years and over. ‘Classic cars’ will be redefined to mean any car older than 30 years.

Furthermore, the annual circulation licence for classic cars will be replaced by an administrative fee of €8.

There will also be a rebate scheme of €200 for conversion of cars to autogas.

The annual circulation licence for autogas powered cars registered after 2009 will be reduced, and the Transport Malta licence regularisation scheme will be extended.