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Car Fees to Be Reduced

The central government is reportedly ready to begin soliciting public comment on a draft plan to drastically cut the fees associated with automobile ownership.

The proposal, which would eliminate many of the fees charged by local governments, is aimed at increasing car purchases by individuals, raising the figure by 20 percentage points to 70 percent in 10 years, China Central Television reported over the weekend, quoting unidentified officials at the State Development Planning Commission.

Under the proposed regulations, auto buyers would have to pay only the existing 10 percent purchase tax and costs for tags and driver's licenses. Post-purchase fees would be limited to annual road maintenance and vehicle examination levies based on a unified nationwide standard, the report said.

At present, car buyers are hit with more than 100 charges, including a traffic information and management fee, environmental-protection fee and a city construction fee. While the charges vary from place to place, in Shanghai they can exceed 10,000 yuan (US$1,200) a year.

An executive at a local auto venture, who declined to be identified, told Shanghai Daily yesterday that his venture hasn't heard about the new regulations, but he's happy with the development.

"If it's true, it's really good news," the executive said. "The government's encouragement of individual car ownership needs regulatory support."

According to the CCTV report, many of the fees charged by city governments will be abolished once the new regulations go into effect. Those that remain will be standardized nationwide.

The report did not specify the schedule for implementing the new rules, nor did it calculate how much drivers will save overall.

In Shanghai, the savings could be substantial given the monthly auction for private plates, which usually cost about 10,000 yuan.

The new rules apparently would set a standard license-tag fee across China, allowing cities to recover only the cost of making the plates.

Last year, about half of the 600,000 vehicles sold in China were bought by individuals, compared with a mere 10 percent in the early 1990s, when state-owned companies, government departments and foreign ventures were the main purchasers.

The figure is even higher in some cities such as Beijing, which offers free private plates. More than 60 percent of the cars sold there last year went to individuals.

The proposal to cut fees represents a further move toward creating equal treatment for all car buyers. In the past, some cities that hosted auto manufacturers gave preferential treatment to their factories.

As the site of two major automakers, Shanghai Volkswagen and Shanghai General Motors, the city used to restrict licenses to only those cars produced locally. Last year, Shanghai dropped that rule in addition to a 20,000-yuan minimum bid requirement for entering the tag auction.

"Protecting their own interests is the main reason for different city governments to impose different charges," said Luo Jinling, a senior engineer with Shanghai Oriental Auto Magazine Agency Co. Ltd. "But it has cut car-buying enthusiasm among individuals."

The central government is also trying to encourage the production of more-affordable models through the use of tax incentives for cars with smaller engines, according to the CCTV report.

(Eastday.com 08/13/2001)

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