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Tax Cut to Promote Production
The central government's recent announcement that it will cut consumption taxes added to the market-price of vehicles with lower exhaust emissions demonstrates its commitment to promoting the production and consumption of environmentally friendly vehicles.
According to the announcement by the State Administration of Taxation (SAT) and the Ministry of Finance, tax bills for automobile manufacturers whose products satisfy the European II emission standard (Euro II) will decrease by 30 per cent.
The products include sedans, sports vehicles and mini-buses.
Auto-manufacturers must apply to the SAT and the ministry for a tax cut and must pass strict emission tests from the State Administration of Machine-Building Industry (SAMI) and the State Environmental Protection Administration (SEPA), said SAT official Tan Congjun on July 23.
"The tax cut is designed to urge domestic vehicle manufacturers to upgrade their emission-reducing technologies and make more environmentally friendly vehicles,'' Tan said.
The preferential tax policy is a positive contribution to the country's attempt to control automobile emission pollution, especially in big cities, Tan said.
Many cities, such as Beijing and Shanghai, have already implemented strict automobile emission regulations to alleviate mounting air pollution.
Moreover, all vehicles in the countryside will be required to meet the European I emission standard by the end of this year and Euro II by 2005, said SEPA sources.
"The tax cut will significantly benefit the sustainable development of the country's fledgling auto industry,'' said Du Fangci, an official from the SAMI.
The industry is committed to producing more environmentally friendly automobiles, Du said.
The government's announcement came about four months after 16 domestic auto manufacturers appealed to the government to cut the tax added to vehicles when they are sold by half this year and to cancel it by 2001.
Auto manufacturers, including the Changchun-based First Automotive Works in Northeast China's Jilin Province, the Shanghai Automotive Industry Corp and the Tianjin Automotive Industry (Group) Co Ltd, also suggested that the government remove arbitrary charges and fees imposed on vehicle users.
Since 1994, the government has slapped a 3 to 8 per cent tax onto the price of a vehicle, depending on the level of its exhaust emissions.
Industrial analysts said the tax cut is a step in the right direction, but that it will not greatly affect the prices of vehicles on the domestic market.
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