Romania To Lower Car Tax, Pay Back Tax Differences

Romania's pollution tax on cars will be reduced from the current values which is triple compared to July 2008 and vehicle owners who paid the tripled tax might get their money back.

The government will adopt the changes by emergency decree in the following Cabinet meeting, environment minister Nicolae Nemirschi said Wednesday.

The minister added a draft law will be promoted by this summer, instating an annual tax for all polluters.

"The tax will have the same principles, but it won't be as high. That is for the short term, because we will submit to parliament a draft law instating an annual tax for all polluters. Until then, the new tax will apply. The elements to be considered in the calculation of the new tax will be carbon dioxide emissions and engine capacity. In this first stage, we're eliminating the tripled car tax," Nemirschi said.

Euro 4 vehicles will still be exempt from the tax this year. The new car tax will be set after consultations with the European Commission.

The European Commission recently informed the Romanian government that the decree tripling the car tax, passed by the former government, breaches EU laws.

Romania's former liberal government decided in April to introduce the pollution tax for cars, calculated depending on the technical data of each car, based on carbon dioxide emissions, which replaced as of July 1, 2008, the tax for the first registration of cars which was then effective.

Amendments to the car tax brought a fall in the number of new cars, and boosted used car imports.

On the backdrop of the increase in the number of imported second-hand cars, the government decided via an emergency decree in December to triple the car tax for used cars, and to suspend it for new cars with Euro4 engines of up to 2,000 cubic centimeters, registered or the first time in Romania and the European Union.

In January 2009, total car registrations in Romania, including new and used cars, were down 52.8% compared to January 2008, an indication that the new car market continues its abrupt decline, while registrations of imported used cars took a nosedive in January following a sharp increase of nearly six times in December 2008.

Mediafax