Xinhua. China’s legislature voted on Friday to adopt a new tax based on engine size to encourage the use of smaller engines in vehicles and vessels to reduce pollution and oil dependence. The law will go into effect on 1 January 2012.
Under the old regulations, the same levy was charged for all motor vehicles, regardless of engine capacities. The annual taxes on vehicles and vessels range from 60 yuan to 5400 yuan, according to engine size as stipulated by the new law. Under the old regulations, the tax ranged from 360 yuan to 660 yuan.
…The second draft of the law, which was submitted to China’s legislature for review on February 23, made significant tax adjustments based on suggestions from the public. According to the second draft, taxes on vehicles with engine capacities from 1.0 liter to 1.6 liters dropped from 360-660 yuan to 300-540 yuan. Meanwhile, taxes on vehicles with engine capacities of 1.6 liters to 2.0 liters dropped from 660-960 yuan to 360-660 yuan. This means that the tax burden for owners of vehicles with engine capacities of 2.0 liters or below will not be increased from the current rate.
In China, 87% of cars on the road have engine capacities of 2.0 liters or below.