"Those who do not supply taxes to the state, yet give the state additionally burdens, should not be allowed to purchase a vehicle,".
Tony Pugliese - JUST-AUTO
- Jan 18, 2011
Too many cars, too much congestion and too much pollution. Does this story sound familiar to you? --Ed.
Metro level pollution and congestion problems
Beijing municipal authorities have introduced stringent restrictions on new vehicle registrations on 1 January in the capital in an effort to ease congestion and air pollution. The city authorities announced they will only allow 240,000 new vehicle registrations this year - roughly one-third of last year's total.
A monthly average of 20,000 new vehicle registrations will be allowed this year, with private buyers accounting for 88% of the allocation, or some 17,600 passenger vehicles per month. Individuals can submit just one vehicle registration application and must prove they are local Beijing residents, or foreigners who have been working in Beijing for at least a year.
A monthly 'lucky draw' will be held to determine the successful applicants, the first scheduled to be held on 23 January. City authorities said they received 60,000 new online registration applications at the official website in the first three days of January - three times the monthly quota.
Unsuccessful applications will be automatically included in the following month's draw. The impact of this scheme on the national market is expected to be limited.
"It could potentially reduce vehicle sales by up to 300,000 units", according to John Zeng - an analyst at IHS Global Insight based in Shanghai. Stronger replacement sales will make up part of the deficit, while buyers may also register cars in neighbouring provinces. The worst hit from these restrictions will be local dealers, which are expected to see a notable drop in sales volumes.
National, Regional problems compound car issues for China
The national automotive market could also come under additional pressure from higher interest rates, as the central government moves to ease inflation in 2011. The Ministry of Finance has also withdrawn small car incentives introduced during the global financial crisis more than a year ago. Sales tax on cars up to 1.6L, which account for around 60% of total vehicle sales, returned to 10% on 1 January.
Additional restrictions on who can buy new cars may be on the way. Following recent news of new rules for Beijing, comes a local report citing Zhejiang Provincial Committee member Zhou Jianqiao as saying: "Only businesses or individuals paying over CNY50,000 (US$7,600) of taxes annually should be allowed to purchase a vehicle."
According to Gasgoo.com, Zhou, in his "proposal regarding how to resolve traffic congestion problems" submitted to the fourth session of the 10th Provincial People's Congress, said the reason behind the current levels of traffic congestion is the rapid increase in the number of privately-owned automobiles, advocating that tax evaders and others who do not pay tax be prohibited from purchasing a car.
"Those who do not supply taxes to the state, yet give the state additionally burdens, should not be allowed to purchase a vehicle," he said. Zhou also suggested that buying cars be limited to businesses and individuals paying at least 50,000 yuan ($7.590) in taxes annually.
According to the report, Zhou calculated the CNY50,000 threshold on an individual tax rate of 20% as, according to his logic, those paying at least CNY50,000 in taxes have an annual income of over CNY250,000 ($37,950).
"To buy a mid-class car right now, including paying related operating expenses requires around CNY200,000 yuan ($30,360). However those who buy economically priced vehicles occupy the same public resource costs - such as roads, parking lots - as everyone else," he said. "In order to rectify the traffic congestion problems, [we can] only raise the restrictions on purchasing vehicles, limiting the number of cars being sold, as well as providing measures to encourage increased public transportation usage."
Zhejiang, which translates as 'crooked river' is an eastern province bordering Shanghai to the north and its major cities include Hangzhou, Haining and Ningbo.... [Read More]