960428

China plans to cut car taxes levies car

BEIJING: China plans to unify and cut taxes and levies on car sales that are weakening the automobile market and causing rising stockpiles, the China Daily Business Weekly said on Sunday.

Car owners in China are subject to at least 20 different taxes, charges and fees, which can add up to 65 percent of the car's price, the newspaper said.

The levies include sales taxes, consumption taxes, value-added tax, an "institutional purchase control" charge, infrastructure development fees and, in some areas, car purchase taxes aimed at raising funds for education and family planning, it said.

It quoted Ministry of Machinery Industry officials calling for sales taxes be replaced by a smaller tax based on fuel consumption and for the scrapping of random taxation by government departments and local officials.

The complicated car tax system in China's provinces meant setting a timetable for the new regulations was impractical, but there was an urgent need for action, the officials said.

"Experts generally agree that the current tax burden has kept the car market weak, with stockpiles rising and prices dropping," the newspaper said.

Price cuts by Volkswagen Shanghai Automobile Corp, a Sino-German joint venture and China's biggest car producer, had forced other producers to drop prices below production costs to avoid losing market share, it said.

The price cuts had failed to boost demand, with potential buyers waiting to see if prices would fall further, it quoted a car industry official as saying.-Reuter