According to the Ministry of Finance (MOF) and the State Administration of Taxation, starting from September 1st, China will adjust its vehicle tax rates to favor smaller-capacity, more fuel-efficient engines that will cut energy usage and reduce emissions. 

While the tax on cars with engine capacities of 3 to 4 liters will rise to 25 percent (previously 15 percent) and double to 40 percent for engines that are more than 4 liters, it will decline from 3 percent to 1 percent for cars with engine capacity of 1 liter or less.

That way, the MOF hopes to promote the development of low-emission cars while restraining the production and sales of high-emission vehicles.

The ministry said the policy was part of an ongoing national campaign to cut energy intensity by 20 percent and major emissions by 10 percent between 2006 and 2010.

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