Auto-related tax increases sharply, will vehicle owners become the "tender meat" again? Recently, Ganzi traffic violation inquiry showed that a statistics published by the Ministry of Finance indicated that auto-related taxes in China grew rapidly last year. The purchase tax on vehicles increased sharply by 54%, exceeding 179.2 billion yuan, and the growth rate ranked second only to land value-added tax among major taxes. Due to the end of small-displacement purchase tax preferences this year, many automakers have halved their market growth forecasts.
Recently, I saw a notice on the website of the Ministry of Finance stating that the vehicle purchase tax grew rapidly in 2010, generating revenue of 179.203 billion yuan, up 54.0% year-on-year. The proportion of vehicle purchase tax revenue in total tax revenue was 2.4%.
It is understood that the tax base for the vehicle purchase tax is the total sales amount of taxable vehicles (including automobiles, motorcycles, electric vehicles, trailers, and farm transport vehicles).
The Ministry of Finance said that there were two main reasons for the high-speed growth of vehicle purchase tax revenue in 2010. First, automobile sales achieved high-speed growth. In 2010, national automobile sales reached 18.0619 million units, up 32.37% year-on-year. Second, vehicle purchase tax preferential policies were adjusted, raising the vehicle purchase tax rate for motor vehicles with an exhaust volume of less than 1.6 liters from 5% to 7.5% starting January 1, 2010, which led to the rapid growth of vehicle purchase tax.
Automobile enterprises lower expectations for this year's car market
I learned that among the major taxes listed by the Ministry of Finance, the growth rate of vehicle purchase tax was second only to land value-added tax (77.4%). Will there be a sharp contrast between last year's surge in purchase tax and this year's possible decline? Yesterday, I learned from the automobile market that due to the exit of multiple policies encouraging automobile consumption this year, many automakers have lowered their growth forecast for the car market in 2011 to 10%~15%, meaning a "halving" of the growth rates in 2009 and 2010. Since the purchase tax preference for small-displacement models has been canceled, many dealers even subsidize consumers with the difference in purchase tax out of their own pockets.
A salesperson from Dongfeng Nissan said that the purchase tax preference stopped as of January 1. "For example, Qida now requires paying an additional one or two thousand yuan in taxes." According to my incomplete statistics, nearly ten brands across various markets have subsidized consumers' purchase tax.
Or it may affect the direction of the second review of the vehicle and vessel tax law
Last year, China introduced a draft of the vehicle and vessel tax law, sparking controversy from multiple sides. One view called for not treating private cars as "tender meat" and questioned whether the vehicle and vessel tax based on the valuation of vehicles and vessels had the suspicion of "double taxation" with the vehicle purchase tax. With the sharp increase in vehicle purchase tax year-on-year, how the vehicle and vessel tax law will be finalized has attracted attention.
According to Shanghai media reports, after the first review of the draft that proposed taxation based on displacement, over ten thousand opinions were collected in December last year. Therefore, before entering the second review in February, adjustments will be made to the draft. It is expected that the scope of low tax amounts might be expanded, allowing more vehicle owners to enjoy lower tax burdens, or consideration might be given to changing the 1.6-liter taxation threshold to 1.8 liters or other displacements. According to the original draft, the vehicle and vessel tax for cars above 1.6L would increase.