Decision pending on car’s first registration tax

Newsroom 11/09/2007 | 15:36

The pending decision could influence the investment plans of important carmakers in Romania. French group Renault could give up some of its planned investments in Romania if Automobile Dacia's sales halve after a 50 percent drop in the cars' first registration tax, said Francois Fourmont, general manager of Automobile Dacia, late last week. The firm fears the reduction would prompt more Romanians to import cars from abroad.
The company could be among the most affected by the drop in tax, as the main car segment to suffer will be cars under EUR 10,000, like the Dacia Logan. Fourmont gave the example of the Polish market, which has imported many second hand cars following its EU accession. “Now the Polish car market is down. Around 100,000 cars enter the country each month, the same as Romania sees in one year. I refuse to think Romania will become like Poland,” said Fourmont.
“The tax problem is a matter of principle, not of value. It is a matter of its compliance with the Accession Treaty. The current discussions with the European Commission representatives are not tackling the value of the tax, nor the country's right to apply it, but more the principles of a uniform taxation,” said Vladescu. He met last week with EC representatives who raised the problem of the tax discriminating between cars already registered in the country and second-hand cars brought to Romania. Second-hand cars sold by Romanian citizens are currently not taxed. According to Romanian authorities, the EC accepts Romania's right to introduce a tax which should support environmental protection. The European Commission is in fact planning to introduce an annual tax with an environmental protection component all over its territory and it is likely this project will be presented in March. Its purpose would be to harmonize car tax at a European level. “Romania has not yet received a written document from the EC on the matter and it has all been discussion,” said Prime Minister Calin Popescu-Tariceanu.
The tax was introduced at the beginning of the year to prevent an increase in the number of used cars from the EU imported to Romania. Tariceanu added that defending the national interest may lead to conflicts with European regulations in the following years, but said that the Romanian authorities were not scared about this situation.
Discussions on the matter will continue between the Romanian and European authorities. European officials, however, did not rule out the possibility of sanctioning Romania for breaking the EU treaty through the implementation of this tax. A European decision on the matter will be based on what Romania does to address the situation. “The commission has the right to start sanctioning procedures. We don't rule this option out in Romania's case, but it will all depend on how discussions evolve,” said Maria Assimakapoulou, spokesperson for the European Commissioner on Taxation and Customs, Laszlo Kovacz. The Romanian authorities have not received a deadline from the EC to resolve the problem.
The first registration tax is calculated using the car's cylindrical capacity, age and pollution levels.

Corina Saceanu

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