EC declines request for further exemption from car tax payment

The Government has asked the European Commission for an extension of the period of exemption form the payment of new car registration tax by six months, until the end of June.

2010, but the request has been denied. The exception will be abrogated on January 1, 2010 and the Executive will need to start looking for other options to help the local automotive industry, Mediafax reports.

In the past two weeks, the Government has been talking to the EC about the possibility of extending the period when the car tax on new vehicles must not be paid and asked for an approval of the extension of the incentive by another six months, until the end of June 2010, without success, official sources said.

The request was made by the Romanian State to the EC following discussions with representatives of the car-making industry in Romania, according to the quoted sources.'The European Commission is anyway against the ordinance that introduced the exemption which has not been approved by Parliament yet.

The Commission finds that the legislation discriminates in terms of taxation. The Commission does not have a problem with cars being taxed an annual pollution fee or a fee calculated based on the car's service life, but finds the taxation upon registration to be discriminatory. The conclusion is that, for now, the authorities may not do anything and the exception will most likely expire'' said the sources. The Government, however, intends to re-analyse in the upcoming period the car tax system and change the applicable laws also with a view to preventing an infringement procedure by the EC.

In-coming Environment Minister Laszlo Borbely said on Wednesday that, in the following days, he would draft an emergency ordinance on the car tax to resolve the object of the infringement procedure started by the European Commission against Romania, noting that the normative act would clearly identify the period when new cars brought into Romania until December 31, 2009 may be registered without having to pay the registration fee. More exactly, people who bought new vehicles registered in the EU from December 15, 2008 through to December 31, 2009, will have the obligation to register the car within 60 days next year in order to be eligible for the exemption from the payment of the car tax.

In June, the Commission wrote a letter to Romania on the subject of the car tax - the first stage of the infringement procedure - demanding that the relevant legislation be amended starting from the acknowledgement of the fact that the current calculation discriminates and protects the local automotive industry.

The European Executive finds that the Romanian law according to which the pollution fee is suspended for selected vehicles but is increased for specific used cars brought from other member states could create discrimination against such used cars and protect local new car manufacturing industry.

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