Large-engined cars on road to steeper tax Tuesday,June 28,2005 Posted: 04:59 BJT(2059 GMT)  China Daily The government is considering a proposal to link vehicle tax to exhaust emissions, a top official has revealed. "The government will levy no tax if consumers buy lower-level or zero emission vehicles," Feng Fei, director of the industry department at the State Council's Development and Research Centre, told China Daily on Friday in an exclusive interview. "Those who buy cars with higher emissions will be taxed more heavily." For cars with an engine capacity of more than 3.0 litres, tax could run as high as 15-20 per cent, Feng said. At the moment, vehicle tax is between 3-8 per cent and is levied on auto producers before vehicles enter the market. "We suggest that tax be levied on car buyers directly, this will encourage them to consider more economic vehicles with lower emissions," said Feng. According to the director, the research and development centre has recently finalized a report on car tax, which has already been submitted to the central government. Feng did not reveal when the suggestions might be implemented. "The taxation change is mainly aimed at encouraging car owners to consume less oil and at cushioning environmental pressures," said Feng. A previous report from the development and research centre stressed that oil supply and the environment would be great challenges for the country. The centre predicts that by 2010, cars will consume 138 million tons of oil each year, 43 per cent of China's total oil demand, with this figure growing to 256 million tons, 57 per cent of total demand, by 2020. "In the future urban pollution will mainly be generated by automobiles, unless we are able to effectively control exhaust emissions," he said. Feng said the proposal to levy a higher tax on cars would not mean suppressing the development of China's car industry. "China's auto industry is vital for driving the country's economy forward," said Feng. "What we need is healthy development in line with the capacity of our resources." Weekend fuel price hike In another blow to motorists, the National Development and Reform Commission decided on Saturday to raise retail prices for refined oil products given the state of international oil prices. The commission said the invoice price of gasoline and diesel oil is expected to rise 200 yuan (US$24) and 150 yuan (US$18) per ton with retail prices to surge accordingly. In addition, the invoice price of aviation fuel will rise 300 yuan (US$36) per ton. The move comes as crude oil on the international market touched US$60 a barrel on Friday before ending at record highs. On the New York Mercantile Exchange, light, sweet crude oil futures for August delivery rose 42 US cents to end at US$59.84a barrel, the highest closing price since the contract was introduced in 1983. Meanwhile, on London's International Petroleum Exchange, the August Brent crude-oil futures contract climbed 39 US cents to YUS$58.35 a barrel. "The price rise of refined oil products aims to encourage domestic oil companies to expand their production in a bid to guarantee the nation's oil supply," Xinhua News Agency quoted an anonymous official from the commission as saying. Only one month ago, the commission cut the price of gasoline by 150 yuan (US$18) per ton in response to price fluctuations on the global oil market.

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