EC slams Bucharest over energy regulations, car pollution tax

Publish date: 26-06-2009
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The Commission has taken firm actions on Thursday against 25 member states, including Romania, who prevent European consumers benefiting from the advantages of a competitive and open Energy Market by not complying with EU legislation, a press release reads. Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Spain, Finland, France, Greece, Hungary, Ireland, Italy, Lithuania, Latvia, Luxembourg, The Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, Sweden and the United Kingdom will be receiving letters of formal notice for not complying with applicable gas and electricity regulations. The Commission has also sent letters of formal notice to Greece, Poland, Portugal, Romania and Lithuania for maintaining a system of regulated prices in violation of the EU directives on electricity and gas.

The Commission opened 12 new infringement procedures against Romania, the most serious in regard with the liberalization of the energy market.

Romania is accused of lack of transparency regarding the operation of the market which, in the opinion of various European sources, is a very serious accusation. The Commission warns authorities that conditions applicable to public services have not been met and that they have not given the Commission the requested information on prices charged to consumers other than households. The request of the European Executive was about preferential prices charged to specific economic operators which break the European law. The Commission had previously opened an infringement procedure against Romania in the energy sector, in connection with the privatisation of Electrica Moldova. If it fails to report back and comply, Romania faces hearings before the European Court of Justice resulting in big fines as well as the obligation to correct compliant.

In 2008, the EC opened a total of 38 infringement procedures against Romania, 13 of which refer to either the incompatibility of various legal norms with the EU law or to an incorrect enforcement of existing laws, and 25 to the non-communication of the transposition of EU directives.

Pollution Tax

The Commission has requested, yesterday, information from Romania as regards its legislation on the application of a pollution tax on passenger cars, according to a press release. The Commission is of the opinion that the provisions of the Romanian legislation, according to which the application of the pollution tax for certain motor vehicles is suspended while it is increased for certain used cars coming from other Member States, might discriminate against used cars brought from other Member States and protect the domestic new car industry. The request takes a form of "a letter of formal notice" - the first stage of the infringement procedure laid down in Article 226 of the EC Treaty.

If the Commission does not receive a satisfactory response within two months, it may proceed with the second stage of the procedure (to issue a reasoned opinion) and ultimately bring the case before the Court of Justice. According to the Romanian legislation entered into force in February 2009, cars pertaining to the EURO 4 category and with a cylinder capacity of less or equal to 2.000 cmc are exempt from pollution tax in Romania if registered for the first time anywhere within the EU during the period from 15 December 2008 to 31 December 2009. According to the same legislation, the tax rates applicable to other cars subject to the tax have also been doubled.

Following the changes in the Romanian legislation the Commission received a very large number of complaints. By issuing this press release the Commission informs the public on the outcome of its investigation of the Romanian legislation. The Commission supports policy measures aimed at favouring less polluting cars. However, the Commission, as Guardian of the Treaty, must ensure that they are compatible with the EU law. In this respect, the way in which the Romanian legislation is constructed seems to have a protective effect for domestic industry of new cars. According to consistent ECJ case-law of the European Court of Justice, Member States can impose differential taxation on similar products provided that it is based on objective criteria and does not lead to any protection of domestic production. In the Commission's opinion, the criterion of "the first time registration" is not a completely objective requirement as it does not take into account the inherent quality of cars. It could, in certain specific cases, lead to discrimination against second-hand cars coming from other Member States.

Indeed, following the application of the "the first time registration" requirement, all new cars registered during the period fixed by the Romanian legislation and which instantly join the Romanian market of used cars, circulate tax free. On the contrary, cars of an equivalent quality, which are going to be registered in Romania during the same period although not for the first time and which are in direct competition with the domestic goods, will be subject to a substantial tax burden.

APIA: EC decision 'is strange'

Changing EU car taxation in Romania will cause 'total havoc' and the EC decision to have Romania change its law in the field 'is strange', because it has agreed with the current version of the law on the used vehicle registration tax, the President of the Association of Passenger Vehicles Makers and Importers (APIA), Ernest Popovici, has told Mediafax. He added that the protection of local automotive industries had been funded with a lot of money in many EU states and that the car taxation law is much more severe in other countries of the bloc.

'One thing is clear - any change of law turns an entire system upside down', the APIA president further said. The car registration tax that was introduced to the Fiscal Code at the beginning of last year in March 2007 became the object of an infringement procedure. The calculation formula proposed by the Government has been through a number of rounds of negotiation with the Commission, after which Romanian authorities were forced to amend it and make it compliant with the EU law. However, Environment Ministry representatives were saying in the spring that the automotive pollution tax could be abrogated this autumn and replaced by a yearly tax calculated based on the size of the engine and CO2 emissions. Both the used and new vehicles market came to a halt, waiting to see what will happen next, with interested buyers hoping to pay less.

Nine O'Clock

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