China says to raise consumption tax on big cars

China's cabinet agreed in principle to raise the consumption tax on cars with large engines to help save energy, the government said on Wednesday.

The State Council did not provide details on when or by how much it would increase the tax, but it said that such a move was needed to contribute to the country's energy efficiency drive.

"With the acceleration of industrialisation and urbanisation, the tight energy supply is becoming one of the major obstacles hampering our economic and social development," the cabinet said in a statement on the central government's website (www.gov.cn).

It added that energy-efficient automobiles would be given preferential tax treatment, and said that it would look to make sure that polluting old automobiles are taken off the streets and that public transportation will be ramped up.

The cabinet also said efficiency should be emphasised more broadly in the power sector.

"Closing fuel-oil fired power plants must be made the main point of shutting small power plants. The level of support for economising on and replacing crude oil projects must be strengthened," the report said.

Beijing, trying to make its economic growth greener, has set a goal of reducing energy intensity by 20 percent between 2006 and 2010.
But China heavily subsidies fuel, meaning there is little incentive for status-conscious consumers to buy efficient car models rather than gas-guzzling sedans.

The cabinet also passed a draft order on energy efficiency in buildings that will encourage the use of new technologies and materials in the construction of homes and offices.

It too contained little detail and will need to be followed up with specific implementing rules.