Commerce official: auto sales tax also cut in 2010

Shanghai, December 2 (Gasgoo.com) A mid-level official at China's commerce ministry said yesterday that he is confident the government will continue to cut tax on small-car sales next year, though a decision hasn't been made, Dow Jones reported.

Chang Xiaocun, who heads the commerce ministry's division of market system development, made these remarks as an indication of his ministry's policy preference. A decision on continuing the tax cuts, however, requires backing from the finance ministry and the State Council (China's cabinet).

China's Ministry of Finance and top economic planner, the National Development and Reform Commission (NDRC), have both approved of carrying on with sales tax cuts on passenger cars into 2010, the Shanghai Securities News said over the weekend.

In late January, China halved the sales tax to 5% on vehicles with 1.6 liter engines and smaller, boosting auto sales in the Chinese market to record monthly highs. The tax cut was previously slated to expire at the end of this year.

"Efforts to boost consumption won't change next year," Chang said on the sidelines of a news briefing yesterday, in reference to top Chinese leaders' recent commitment to maintain economic stimulus plans.

China's overall auto sales are projected to reach 13 million units this year, up from 9.38 million units of last year. Sales in the first ten months this year grew 37.8% to 10.89 million units.