Green Tax on Big Cars in China

Before and during the Olympics, the foreign press descended on China and complained about pollution. But China’s government has announced plans on a website to increase its vehicle excise tax to 25 percent for cars with capacity between 3 and 4 liters and to 40 percent for cars with capacity greater than 4 liters. Cars with capacity less than 1 liter will enjoy tax breaks. The Chinese government still heavily subsidizes fuel prices, and car ownership in China has increased 20 percent annually. The tax brings abrupt adjustment to a large and growing market, and analysts expect the new tax, effective in September, to encourage a growing middle class, the bulk of car buyers, to select small vehicles. – YaleGlobal