China Lowers Car tax

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Last updated at: (Beijing Time) Saturday, March 02, 2002

China Lowers Car tax

China lowered the automobile sales tax Friday in the wake of a car price drop in the domestic market, China Daily reported Saturday.

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China lowered the automobile sales tax Friday in the wake of a car price drop in the domestic market, China Daily reported Saturday.

It is the second time that the State Administration of Taxation (SAT) adjusted the tax after the country began implementing it to replace the automobile purchasing fee last year.

"The adjustment indicates that the tax department is trying to create a fair market environment while managing to keep a normal tax income," said Ni Hongri, a research fellow with the Development Research Center at the State Council.

The country should introduce a complete automobile policy to encourage consumption, he added.

Liu Shijin, another research fellow at the center, said, "It is imperative for the government to develop a specific consumption policy and put it into operation to encourage more private buyers."

The current limits, taxes and fees have seriously depressed the market, said Jia Xingguang, an analyst from the China National Automobile Industry Consulting and Development Corp.

Taxes and fees charged by local governments currently average 15 to 40 percent of the price of a car. The taxes and fees imposed on consumers by the central and local governments in 1999 exceeded160 billion yuan (19 billion U.S. dollars), compared to profits of less than 5.8 billion yuan (699 million U.S. dollars) for all domestic auto makers.

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