China mulling plan to cut car purchase tax

Shanghai, December 16 (Gasgoo.com) China's top economic planning body has received proposals from China Passenger Car Association (CPCA) to reform the fuel tax mechanism, and may start to cut passenger vehicle purchase tax based on the proposals sometime next year, the Shanghai Securities Journal reported Tuesday.

China passenger car sales fell 10 percent year on year in November,

this year's third monthly drop.

According to the report, the China's National Development and Reform Commission (NDRC) are considering a proposal to cut the 10 percent tax paid by car buyers to 2 percent for engine sizes of up to 1 litre. Tax for engine sizes of between 1 and 1.5 litres would be 4 percent; engines of 1.5 and 2 litres would be taxed at 6 percent; 2 to 2.5 litres engines at 7 percent; 2.5 to 3 litres at 8 percent, while 3 to 4 litres at 9 percent, and engines greater than 4 litres would stay at 10 percent.

Another proposal is for the tax to be removed completely for cars with engines smaller than 1.6 litres, the newspaper said. It cited an informed source as saying that a decision was likely to be made in the first half of next year.

Wang Chuan Fu, chairman of Chinese hybrid car maker BYD Co, confirmed that competent authorities are now considering abolishing the vehicle purchase tax for passenger cars below 1.6 litres.

The NDRC completed seeking public opinion on the introduction of fuel tax and reforming the fuel pricing mechanism last Saturday, and said most of the 48,643 interviewees of the survey support fuel taxes and asking for a reduction in domestic prices in line with global levels.