Automakers informed of big car consumption tax hike

Shanghai, July 24 (Gasgoo.com) China's State Council and State Administration of Taxation have agreed in principle to raise the consumption tax on cars with large engines to help save energy, a Reuters report cites government announcement on Wednesday.

The State Council announced plans to give preferential tax treatment to fuel-efficient cars and to raise tax on cars with large engines, but it did not provide details on when or by how much it would increase the tax. 

The policy is in line with Chinese Premier Wen Jiabao's call at the meeting of the State Council on Wednesday to save energy. Wen said the government and the public should take more responsibility for saving electricity and fuel to ease energy strains,

China Business News cited sources from an automaker as revealing that some major automakers have got some internal notifications about the adjustments, which are almost coincident with the tax rate changes now reported by the nation's media.

Chinese media reported early this month that the tax rate of 3.0L to 4.0L vehicles will increase to 25% from 15%, and the tax rate of 4.0L and above vehicles will rise to 40% from the current 20%.

"We've actually gotten some written notices, but our business won't be much affected,” said Zhang Suixin, Managing Director of Volkswagen (China) Investment Co.

Jia Xinguang, an independent auto analyst based in Beijing, said that the consumption tax hike will influence the selling prices of imported cars, particularly those with higher displacement.