Tax on car purchases to fall, or stop completely.

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Since the tide of economic woe has turned away from the EU and USA, and towards China, the Chinese government has been quick to enact a series of tax cuts on big purchases, notably on the real estate market, and a possible cut on car sales tax.

With the sales of cars down for the third month running, China is possibly heading towards cutting, or temporarily doing away with sales tax on new car sales. A list of suggestions from the China Association of Automobile Manufacturers (CAAM)  was submitted to the National Development and Reform Commission (NDRC), China’s macro economic planning agency). The list of suggestions details how China would be able to further develop, and kickstart the automotive industry, sales have been lagging for three months, and the sales trend is expected to continue into the new year. The biggest point in the list of suggestions is to lower taxes on sub 1.6l cars, which would encourage first time buyers, and those that have been thinking of buying a car but havent due to the economy to visit their local dealers and buy themselves a car. Current taxes on sub 1.6l cars stands at 10% of the cars value.

Chinese automakers have reportedly warmed to the lowering of taxes on sub 1.6l cars, as many of their offerings are smaller vehicles that are within the engine limits. Whether or not the NDRC takes action on the advice offered from CAAM.