The Secretary for tax policy of the Finance Ministry, Shi Yaobin, said recently in Tianjin that China's auto industry has developed rapidly and placed heavy burdens on the country's resources and environment. Currently, the Finance Ministry is considering introducing a series of tax policies to promote energy conservation development and environmentally friendly vehicles.

Shi expressed the above idea recently at the "International Forum on Chinese Automotive Industry Development" (IFCAID) held in Tianjin. He said that the rapid increase in consumption and possession of automobiles would surely lead to a continuous growing demand for fuel. Consequently pollution emissions from automobiles are also on the rise. Now automobiles are becoming major energy consumers and pollution producers in China. 

Shi said that the ministry is planning to reform and improve the auto-related tax policies. Taxes can help guide the long-term development of the automotive industry, he said.

The ministry is now considering preferential tax policies that encourage the energy conservation development and environmentally friendly automobiles. Also they are studying all clean fuel tax policies related to vehicle emissions.

Tax policies that restrict the development of fuel inefficient automobiles will also be introduced, according to Shi. The ministry is now researching and formulating punitive tax policies that can be levied on automobiles failing to reach official fuel consumption standards.

With regard to the fuel tax reform program, Shi said that, with various preparations having been finished, the government will choose a proper time to introduce the fuel tax.

The ministry is also studying the possibilities of collecting an environmental tax. In the meantime, in order to give a full play to the consumption tax in adjusting production vs. consumption, automobile tax ranges will be readjusted to restrict the development of high-emission automobiles.

Statistics show that at present there are 50 million automobiles in China. Auto fuel consumption accounts for about one third of the total fuel consumption. The percentage is expected to reach 57 percent in 2020. Moreover, motor vehicles have replaced soot as the biggest air pollution sources in some big cities.

(China.org.cn by Zhang Ming'ai, September 13, 2007)