Hefty taxes to be imposed on gas guzzlers in China

Alarmed high world oil prices and sporadic shortages of gasoline and diesel fuel in big cities this summer, China's leaders are drafting plans to impose steep taxes on cars and sport utility vehicles with gas-guzzling engines.

The taxes would add as much as 27 percent to the price of vehicles with big engines, notably sports cars and SUVs, auto-industry officials and people advising the government on the plan said. At the same time, taxes may be cut slightly for models with the smallest, most efficient engines, though the details of these cuts are still under discussion, they said.

The taxes follow China's adoption on July 1 of fuel economy standards that are more stringent than those in force in the US. The Bush administration announced plans on Tuesday to phase in tougher fuel economy rules for light-duty trucks in the 2008-'11 model years, but the Chinese have already imposed stiffer standards to take effect in 2008-'9.

Since the 1970s, the US has had a so-called gas-guzzler tax up to US$7,700 on cars that get very low gas mileage. The tax falls mainly on sports cars with huge engines, like Ferraris, because SUVs, pickup trucks and minivans are exempt from the tax -- an exception that has contributed to a shift away from cars and toward these trucklike vehicles in the US market.

The planned taxes in China are part of a much broader effort to improve the nation's energy security. Efforts by state-controlled oil companies to buy foreign businesses have drawn the most attention, particularly CNOOC's (中國海洋石油) unsuccessful US$18.5-billion bid this summer for Unocal.

But China has also been focusing on energy efficiency. Zhang Guobao (張國寶), vice minister of China's State Development and Reform Commission, said last week that Beijing's next five-year plan, for next year through 2010, would put energy conservation ahead of expanding supplies, the official New China News Agency said.

The State Council is in the final stages of drafting the new automobile taxes, a complex process involving many government agencies, said He Dongquan (何東全), the transportation program official in the Beijing office of the Energy Foundation.