China: Consumption tax

Beijing is retooling its tax structure to incentivize the consumption of smaller, more efficient and less polluting cars. Under the current structure, there are 3 categories for engine size, while the new structure will likely have five. Buyers of low or zero-emission vehicles will be exempted from taxes while those who purchase bigger cars will pay higher taxes. (Current avg vehicle tax: 3-8 per cent levied on auto producers. New tax on bigger cars could be as high as 15-20 per cent.)

Date Implemented: 2006

Status: Planned; Mandatory

Targets: growth of clean vehicle market/industry

References: China Daily News stories: Wu Chong: "Buyers of big cars will pay more tax" 11/25/05; Fu Jing "Buyers of small cars to enjoy big tax breaks" 11/9/05