Romanian Govt Considers Replacing Car Registration Tax With Yearly Pollution Tax

According to Borbely, the current pollution tax, which is paid upon the car's first registration, might be replaced by a yearly tax, applicable to all automobiles. The minister gave no further details on this idea.

The new tax bill, as drafted on June 17, said the tax would be reduced by 30% as of July 1, 2011. On the same date, the government would have started to refund car owners who had paid the tax in one of its previous incarnations.

However, the act has been redrafted and now makes no mention of July 1, 2011, or indeed any other date, so it is uncertain when the reduced tax will be introduced and when the refund procedures will begin.

To take effect, the new tax bill must be approved by the both the Government and Parliament. But the Parliament is in recess from July to September, so debates on the bill can start this fall at the earliest. Moreover, the refund procedure must be established through norms, approved within 30 days of the bill being published in the Official Journal.

The current car tax system will be changed following a judgment by the Court of Justice of the European Union, which found the tax in violation of community legislation, as it discourages the sale of used cars from other states to Romania.

The judgment was issued in response to a question by a Romanian court hearing the case of a Romanian national who bought a used car from Germany in July 2008. He paid the pollution tax when registering the car in Romania and complained that it is charged only on imported used cars and not other used cars already registered in the country and then resold.

Legal experts have warned the Government that Romania risks sanctions from the European Union, from a potential infringement procedure, and a great number of suits brought on by car owners, unless it urgently changes the car tax and repays the funds it collected.

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