The government is considering a proposal to link vehicle tax to exhaust emissions, a top official has revealed.

"The government will levy no tax if consumers buy lower-level or zero emission vehicles," Feng Fei, director of the industry department at the State Council's Development and Research Centre, told China Daily on Friday in an exclusive interview.

"Those who buy cars with higher emissions will be taxed more heavily."

For cars with an engine capacity of more than 3.0 litres, tax could run as high as 15-20 per cent, Feng said.

At the moment, vehicle tax is between 3-8 per cent and is levied on auto producers before vehicles enter the market.

"We suggest that tax be levied on car buyers directly, this will encourage them to consider more economic vehicles with lower emissions," said Feng.

According to the director, the research and development centre has recently finalized a report on car tax, which has already been submitted to the central government. Feng did not reveal when the suggestions might be implemented.

"The taxation change is mainly aimed at encouraging car owners to consume less oil and at cushioning environmental pressures," said Feng.

A previous report from the development and research centre stressed that oil supply and the environment would be great challenges for the country.

The centre predicts that by 2010, cars will consume 138 million tons of oil each year, 43 per cent of China's total oil demand, with this figure growing to 256 million tons, 57 per cent of total demand, by 2020.

"In the future urban pollution will mainly be generated by automobiles, unless we are able to effectively control exhaust emissions," he said.

Feng said the proposal to levy a higher tax on cars would not mean suppressing the development of China's car industry.

"China's auto industry is vital for driving the country's economy forward," said Feng. "What we need is healthy development in line with the capacity of our resources."

Source: China Daily