China is raising its sales tax on big cars to as high as 40 percent, and drastically cutting taxes on small cars, in its latest attempt to combat emissions that contribute to heavy blankets of smog over most of its cities. The tax on passenger vehicles with engines bigger than 4 liters will be doubled to 40 percent from 20 percent, effective Sept. 1, the Finance Ministry said Wednesday in a statement on its Web site. Those buying vehicles with engines sized from 2 liters up to 4 liters will have to pay a 25 percent tax, up from the current 15 percent, it said. “Autos are the giants of energy consumption and pollution emissions and this is a major part of the effort to conserve resources and reduce emissions,” the ministry said. The sales tax for cars with engines at or smaller than 1 liter would drop to 1 percent from the current 3 percent, the Finance Ministry said. Tax rates of 5 percent to 9 percent for vehicles with other-sized engines remain unchanged. China is the world's second biggest market for passenger cars, with some analysts forecasting that sales could reach 10 million this year. The country's big cities have imposed auto emissions standards that exceed those in the US and are at least equal to European levels. Shanghai has banned polluting small motor scooters and limits access to downtown areas.
