China taxes big cars to curb pollution

China will increase sales tax on large vehicles in an effort to save energy and reduce pollution, Reuters reported the Ministry of Finance as saying.

From September 1, 2008, China will increase taxes on cars with engines larger than four litres to 40%, an increase of 20%. The tax on cars with engines between three and four litres will rise to 25%, a 10% rise.

Most Chinese drivers own compact cars, but those who can afford them are increasingly buying large vehicles. Sales of big sedans rose 50% in the first half of this year, while sales of SUVs and luxury sedans have doubled, the Associated Press reported the China Association of Automobile Manufacturers as saying.

Yi Junfeng, an analyst at Changjiang Securities, told Reuters: "The policy is just a symbolic gesture to raise awareness in a high oil-price year."

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