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September 25, 2020

New auto tax version might impact nearly 3 million citizens

Over 40,000 auto tax case files are pending in courts.

The Executive’s likely decision to levy a tax on any motor vehicle registration before January 1, 2007, is, on paper, going to have an impact on no fewer than 2.8 M Romanians, according to Realitatea.net. At least, this is what results from the talks held so far over the issue. Even the owners of Dacia cars registered before 2007 will have to take into account that potential car buyers would have to pay a hefty pollution tax, ‘Adevarul’ daily newspaper reports.

However, the tax will be cut by 20-30 per cent, with the exact rate to be set at today’s session of the Executive. The tax cut will be proposed by the Environment Ministry, and will be applied after the Government-prepared emergency ordinance enters effect.

Environment Minister Laszlo Borbely maintains that those who have already paid the tax now held illegal will not automatically get their money back, “Adevarul” reports, as the tax will only be returned to those that challenge it in court, and win. The new tax form will apply to all the vehicles brought into Romania before January 1, 2007, on which no tax has been levied. The tax will be paid by the buyer when the transaction is struck, Minister Borbely said. His view however is at odds with that of the Justice Ministry. Law experts warned the Government that Romania risks financial sanctions from the European Union and more legal actions filed by vehicle owners, including those who originally lost their cases in court, unless Government urgently amends the auto tax and returns the sums paid by car owners. This, as a result of a European Court of Justice ruling following a notification sent by the Sibiu Tribunal. The pollution tax was reckoned discriminatory since it infringes on the EU legislation, given it creates a disadvantage when second-hand cars brought from abroad are sold in the country.

“Following the ruling by the Court in Luxembourg, the Romanian state shall return the quantum of the first registration tax to all its payers since the tax was enforced. Yet, the state would not do it, obviously, on grounds of lack of money, and people will have to take the cases to court. ,” lawyer Gheorghe Piperea said.

“The European Court of Justice has no problem with the law into effect, given its being constitutional and in line with European Union provisions. What they have a contention with is a former law, from 2008, which, for a period of about one year, stipulated that only the second-hand cars brought from abroad should be charged tax, yet not those already registered in Romania. Although the issue was resolved in 2009, that indirect discrimination makes us abide now by the Court’s decision,” “Jurnalul National” cited Laszlo Borbely as saying. What is certain is, we can’t drop the first registration tax, the minister said. “Sixty per cent of the cases closed were ruled in state’s favour, and 40 per cent in claimants’ favour. In the cases where final rulings have been issued, the money will be returned, without a question,” Borbely said. Over 40,000 case files are pending in courts.

Auto tax money went into “cash for junk” programme

The Environment Ministry has also explained that the bulk of the tax money went into the junk car programme. “In 2010, we collected RON 720 M from the auto tax, 700 M of which were put into replacing the auto fleet,” Borbely said, who added that the auto tax also led to a decline in the import of cars over 15 years old, from 31 per cent in 2010, to 9.8 per cent in the first four months of the year. A number of 63,000 cars had been purchased under the junk car scrap programme by Jan. 31, 2011, of which a little over 27,000 were brands manufactured in Romania.

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