The EC was to send an official letter asking the Romanian authorities to change the current car taxation system, saying the current rules were not compliant with the European Community Treaty. EC representatives say the new-car taxation system in Romania discriminates against second-hand cars imported from European Union countries.
The Romanian authorities must send a response to the EC in two months' time. If it does not satisfy the European body's requirements, the next step will be for the EC to bring the case to the European Court of Justice, whose decision will be mandatory.
Prior to receiving the EC notification, the Romanian prime minister Calin Popescu-Tariceanu had said the government would not give up on the tax, because it did not want Romania to become a dumping ground for second-hand cars in Europe. The government was currently trying to find a solution to apply the tax to fit Romania's interest and the EU requirements, said the PM.
Hungary and Poland also kept similar car registration taxes. Hungary had to pay back some EUR 3 million in 2006 to car owners who had had to pay the tax, after the EU ruled the tax illegal.
Lowering the tax for Romania was one of the suggested solutions, favored by the minister of environment, Sulfina Barbu. Barbu said the Ministry of Finance had given no solution in the government meeting last week to address the car tax problem.
EC authorities have said an EU member state may apply taxes to second-hand imported cars if the taxes are compliant with Article 90 in the European Community Treaty. According to the article, a European state may not apply a higher tax to products imported from the EU than it does to similar products on the local market. Under the local system, the tax on imported second-hand cars differs from that on cars already registered in Romania. The tax increases based on the car's age.
The Romanian authorities claim the tax was to address environmental concerns of used cars imported to the country. The European officials, however, point out that the tax system has no connection to environmental issues as it is not calculated based on the pollution caused by the car.