China to offer tax break for eco-friendly cars

The Chinese government has decided to offer tax incentives to those buying eco-friendly automobiles. such as hybrids and diesel-engine vehicles, a move that would lower prices by almost 10%. Currently, when buying an automobile or motorcycle in China, the buyer must pay for the price of the vehicle, which includes a consumption tax of 17%, plus a purchase tax of 10% on the pre-consumption-tax price. For example, a hybrid version of Honda Motor Co.’s Civic sells for about 270,000 yuan (US$39,636). At present, buyers must pay an additional vehicle purchase tax of about 23,000 yuan (US$3,376). This tax break could heighten demand for hybrids, considering that the price gap will shrink between hybrids and conventional vehicles. (June 26, 2008)