Higher Taxes for Small Cars in China

VOA Breaking News (Voice of America)
December 29, 2010 at 1:10 am

China plans to reintroduce higher taxes on the purchase of small cars in the New Year.

The government cut the tax on small passenger cars in half in 2009 – from 10 percent to 5 percent – to boost domestic spending during the global financial crisis. But since the Chinese economy has now recovered, Finance Ministry officials say it is time to reimpose the higher tax.

The tax on small cars – those with engines not larger than 1,600 cubic centimeters – will return to 10 percent on Saturday . It had already been adjusted to 7.5 percent at the beginning of 2010.

China is now the world's largest auto market. Annual sales during 2009 were nearly 14 million vehicles, and carmakers expect 18 million total sales this year .