China to keep sales tax cut for small cars

• Source: Global Times
• [14:23 December 10 2009]
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To maintain the growth of the auto industry, the State Council Wednesday approved to continue imposing low sales tax on small engine vehicles in 2010.

The sales tax rate on vehicles with 1.6-liter engines and below is currently at 5 percent and will be at 7.5 percent next year, still lower than the original 10 percent.

Subsidies will continue to be offered for vehicle purchases in rural areas and to encourage car owners to trade in their old models for newer, fuel-efficient ones.

The tax cut was introduced in February this year, and was successful in boosting auto sales in China in 2009. During the first 11 months of 2009, total sales in China was more than 12 million vehicles, up 42 percent from a year earlier.

The central government also announced it would raise subsidies to as much as 180,000 yuan ($26,360), from the 6,000 yuan now, for car owners who trade in their old vehicles for new ones next year.

Agencies and Shi Jierui contributed to this story