China raises tax on big cars to curb pollution

BEIJING (Reuters) – China said on Wednesday it would raise taxes on large passenger vehicles and cut the tax on small cars from next month to cut pollution and fuel use.

But the policy may only have a limited impact on boosting fuel efficiency in the world’s second-largest oil user, as majority of the cars will be spared the tax hike as Beijing seeks to prevent more damage to an already slowing auto market.

The consumption tax on cars with an engine size of more than 4 liters will double to 40 percent, the Ministry of Finance said in its website (www.mof.gov.cn), only days after official data showed China’s car sales growth in July fell to its lowest in two years.

Reuters