Romania's car tax stirs new rows between president and PM, the former asks to cancel it

Romanian President Traian Basescu asked Premier Calin Popescu Tariceanu to cancel the much debated first time car registration tax and return the money to those who already paid it, a release reads.

The European Union forbids border taxes or those with similar effects. The president suggested the car tax falls into these categories. Moreover, a series of Romanian courts ruled in favor of those who appealed the tax, creating a precedent.

In his turn, Tariceanu accused Basescu of failing to understand the significance of the tax and of trying to draw "cheap votes" considering the door-knocking elections in 2009.

Romania's Chamber of Deputies passed on February 19 the proposal belonging to the center-right wing Democrat Liberal Party (PD-L) which also asked for the car tax to be canceled; some 158 votes were cast in favor from a total of 265.

The European Commission called Romania's current first-time registration tax a breach of the country’s European Union accession treaty. The body asked the government to modify the tax and eliminate discrepancies in the way it is applied, as it exempts used cars originating from Romania and taxes those brought from abroad.

The first-time registration tax, applied since January 1, 2007 is calculated on three variables and ranges from 68 euros for new cars to 8,586 euros for certain cars more than six years old.

The tax for a two-year old car with a 1,400 cc engine was cut from 284 euros to 139 euros and taxes for cars with 1,600 cc engine were trimmed from 324 euros to 159 euros.

Romania presented the EC a fine-tuned, first-time car registration tax at the end of April last year which complied with the commission’s demands that the country calculated the tax based on the age of the car. Taxes on cars older than 15 years will also be cut from 4,579 euros to 2,861 euros.

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