Used car taxes could trigger EU fines

Taxes on used cars outlined in the Fiscal Code could violate the EU Treaty and could lead to "extremely harsh" financial penalties, according to Leonard Orban, state secretary in the Ministry of European Integration. "It is very important that, at the time of accession, Romania fulfills all the pledges assumed in the Accession Treaty and avoids under any circumstances violating the EU Treaty stipulations," said Orban. The new Fiscal Code, which will enter into force on January 1, 2007, shows that a tax will be introduced for registering vehicles, including those that have a total weight greater than 3.5 tons. The official offered the example of Poland and Hungary, where the European Commission opened investigations on alleged violations of the EU Treaty, for issues similar to those regarding the Fiscal Code settlements on used cars. Orban said that strict adherence to the EU settlement is very important, as "the financial penalties are extremely harsh." The taxes for cars that comply with the Euro 3 environment settlements, have a cylindrical capacity of less than 1,600 cubic centimeters and are not more than six months old amount to 612 euros. In the case of vehicles with a capacity over 3,000 cubic centimeters and older than six years, the tax will be 5,070 euros. A Euro 2 car that has a cylindrical capacity of 1,600 cubic centimeters will be taxed 2,704 euros, while the taxes on those surpassing 3,000 cubic centimeters will be 6,240 euros. Car owners that have Euro 1 vehicles and a cylindrical capacity of up to 1,600 cubic centimeters will pay 3,744 euros, while for vehicles that have a capacity larger than 3,000 cubic centimeters, the tax is 7,020 euros. Taxes for cars that do not comply with the Euro devices regarding the protection of the environment have a 4,000 euro registration tax, if the engine capacity is less than 1,600 cubic centimeters and 7,500 euros for cars that have a cylindrical capacity of more than 3,000 cubic centimeters.

Even though the European Commission has criticized countries that have imposed such taxes on used car imports, Minister of Public Finances Sebastian Vladescu supported the measure to maintain this category of taxation. The official offered the example of Poland, where an important industry sector was lost because of market liberalization, emphasizing that the number of vehicles that pollute and are dangerous in traffic must be decreased. In March this year, Minister of Environment Sulfina Barbu said the tax the government wants to impose on registering used imported cars, after Romania's EU accession, would be established by following methods used by EU members. "We will not invent anything, just copy the methods used by other states and will take into account living standards in Romania," said Barbu. The minister gave the example of Hungary, which started taxing these imports from May 1, 2004 and succeeded in maintaining the same volume of imported cars as before the accession.