The government also defined the reimbursement system of the car tax in case the vehicle is sold in another member state or in case of accident, in compliance with the European legislation.

“This is an instrument to protect the environment and reduce car pollution. The money will go to the Environment Fund budget,” Korodi said. The money from the car tax will be used to finance several environment projects, the minister added.

The new formula also found technical solutions for owners of cars with Diesel engine equipped with dust filters. They will benefit from a 25 percent discount from the tax. Also, according to the new formula, car owners will have to pay only 2 to 3 percent of the car's value.

Romania signed the Kyoto Treaty pledging to reduce the greenhouse effect 8 percent by 2012. Also, through the EU accession treaty, Romania engaged to reduce CO2 emissions 20 percent by 2020.

The premier and the president have clashed several times over the car tax. Recently, President Traian Basescu urged Prime Minister Calin Popescu Tariceanu to cancel the controversial tax and return the money to people who have already paid it.

The car tax also stirred dissatisfaction within the European Commission which called it “discriminatory.” Romania, which joined the European bloc on January 1 last year, was prodded to change the tax several times. Finally, the commission started infringement procedures against the country for breaking the accession treaty.

The European Commission repeatedly 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.

Source: NewsIn