Vehicle Emission Tax Considered as Part of New Environmental Tax

By Tang Xiangyang
Published: 2010-01-28



The Chinese government is considering imposing a tax on car emissions, according to Zhang Yanyou, deputy director of the Beijing Development and Reform Commission. Zhang revealed to media on Tuesday that the central government was looking into the possibility of charging an emissions tax which was graded according to the amount of emissions produced.

Zhang revealed that the vehicle emission tax was likely to part of a proposed environmental tax which is expected to be introduced some time this year. Currently, there is no specific timetable as to when the new tax will be introduced, Zhang said.

Similar to existing vehicle purchase taxes that favor cars with smaller engines, the emissions tax would be graded so that car buyers would have an incentive to purchase lower emission vehicles.

The announcement, which were made at one of the many meetings taking place under the auspices of Beijing's ongoing NPC and CPPCC meetings, followed earlier media reports that officials from the Ministry of Environmental Protection (MEP) were working with the Ministry of Finance and the State Administration of Taxation on developing a vehicle emission tax.

According to the Beijing News, the MEP has already reached an agreement with other related departments to impose the new tax on vehicle emissions, but the Ministry of Finance is still in the process of determining how to go about collecting it and deciding what to call it.

At a meeting of the State Council Standing Committee held on Jan 27, the central government once again emphasised its determination to continue to reduce carbon emissions and protect the environment.

A commentary piece published in today's Beijing News, a prominent Beijing daily newspaper, argues that, if implemented, the proposed tax would encourage consumers to buy energy-efficient and low-emission vehicles and that auto manufacturers would also have added impetus to produce more electric vehicles or similar low-emission cars. It welcomed the policy stating that "it will help protect the environment while also upgrading the car industry."

However, the author also warned that it's naive for people to believe that the environment would be protected simply by the imposition of an environmental tax, pointing to the continued rise in the country's oil consumption despite the introduction of national fuel duty at the start of last year.

The author went on to argue that in order to promote the development of China's automobile industry, the government should reduce taxes rather than impose more, as China's car owners are already one of the taxed in the world.

According to China's Association of Automobile Manufacturers, car sales in the country increased by nearly 53  percent last year to a total of 10.3 million, with total vehicle sales, which also include other including buses, trucks and the small commercial vans, rose 46.2 percent to 13.6 million units.

Source
The Beijing News: Report of Zhang Yanyou Statement (Chinese)
The Beijing News: Commentary (Chinese)
Oriental Morning Post: Earlier Quote from MEP (Chinese)