Tax breaks boost green car sales in Japan, China

Pending and recently implemented government policies may boost green car sales in Japan and China. In Japan, the government has included tax breaks for environmentally friendly cars in its fiscal 2009 tax reform bill, which is expected to take effect in April. Under the bill, the automobile acquisition tax, equivalent to roughly 5% of a car’s price, will be waived for hybrid cars and electric vehicles. Depending on their fuel economy and exhaust emission ratings, the bill gives further tax reductions of up to 75% on other types of environmentally friendly cars. In China, the government slashed the purchase tax for vehicles under 1.6 liters from 10% to five percent effective January 20 to December 31, 2009, helping spur sales of major domestic automobile brands. The Chinese government also enacted measures to promote renewable energy cars in 13 cities, including the major cities of Beijing, Shanghai, Shenzhen and Dalian. Public transport operators, taxi companies, post services and public offices were promised lump sum subsidies to offset the cost of fuel. (January 31/ February 2/5/6, 2009)