China raises tax on big cars to cut pollution

SHANGHAI/CHINA: China is raising its sales tax on big cars to as high as 40 per cent, and drastically cutting taxes on small cars, in its latest attempt to combat emissions that contribute to heavy blankets of smog over most of its cities.

The tax on passenger vehicles with engines bigger than 4 liters will be doubled to 40 percent from 20 percent, effective Sept. 1, the Finance Ministry said Wednesday in a statement on its Web site. Those buying vehicles with engines sized from 2 liters up to 4 liters will have to pay a 25 percent tax, up from the current 15 percent, it said.

``Autos are the giants of energy consumption and pollution emissions and this is a major part of the effort to conserve resources and reduce emissions,'' the ministry said.

The sales tax for cars with engines at or smaller than 1 liter would drop to 1 percent from the current 3 percent, the Finance Ministry said.

China appears to have made little headway in its struggle to reduce auto emissions, seen most prominently in the effort to keep smoggy Beijing's skies clear during the Olympic games. Many of its cities routinely are cloaked in a toxic gray haze that has grown worse as the numbers of vehicles on the roads has risen precipitously in recent years.

At the same time, authorities are seeking ways to reduce fuel consumption amid major shortages, especially of diesel.