The association says the law on car registration taxes are discriminative and violate EU rules on internal markets. According to the association’s reasoning, the registration tax is levied per units with no regard to the amortization level of the different vehicles, which pushes prices of cars imported from EU member states higher than the prices of cars sold domestically.

MGOE’s motion is not supported by either the National Association of Branded Car Dealers or the Association of Hungarian Car Importers. Gábor Győző, president of the latter association, said the value-based registration tax could make dealers interested in forging bills to minimize their registration taxes.

Finance Ministry officials told HVG that the ministry has been investigating whether the registration tax law violates EU rules, and a decision is expected soon. The central budget made HUF 57 billion revenues in 2004 from registration taxes, which were introduced a year ago.

Meanwhile, members of the European Committee (EC) have initiated to standardize currently diverse application of registration taxes in different EU member states. According to EC members behind the proposal, 14 member states, including Hungary, levy a registration tax on every car that receives a license, and this practice distorts the market and harms consumers interests. Such taxes prompt car manufacturers to set their prices differently from country to country, depending on the type and size of registration tax, or the lack of it.

The proposed new EU regulation could prescribe that registration tax has to depend on environmental features of the cars and a tax paid in one member state has to be accounted for in another member country. The EC proposal also requires that amortization has to be accounted for in the registration tax, and bans the practice followed by some countries including Hungary that different taxes are applied to new cars and used cars.