China may reform car purchase tax system by Q4

Shanghai, July 1 (Gasgoo.com) China's industry regulatory body has intimated that it may reform the current purchase tax system in the fourth quarter of this year, Asia Pulse reported.

The Chinese National Development and Reform Commission (NDRC) said that part of the prevailing purchase tax system restrains demand for vehicles and thus needs to be reformed in order to meet the government's target to boost auto sales.

"As the existing purchase tax is calculated on the basis of value of the vehicle, buyers of alternative-fuel vehicles would be forced to pay higher taxes, which run contrary to the government's intentions to promote sales of such vehicles, " NDRC officials were quoted as saying.

The Ministry of Commerce and the Ministry of Finance have also drafted a plan recently to subsidize those who trade in old cars for new ones, hoping to further strengthen vehicles demand in the country.