China to cut passenger vehicle purchase tax by 60 billion yuan

China to cut passenger vehicle purchase tax by 60 billion yuan

Summary

China to cut passenger vehicle purchase tax by 60 billion yuan

China will provide cuts of 60 billion yuan ($8.977 billion) on passenger vehicle purchase taxes, the state-run Xinhua news agency quoted the State Council as saying on Monday, as part of a broad package of measures to get the economy back to normal and keep major economic indicators within an appropriate range.

In addition, banks and state-owned auto companies will make joint efforts to defer by sixth months the principal and interest repayments of the 90 billion yuan ($13.465 billion) worth of commercial vehicle loans.

The government has not mentioned the implementation details and when the incentive policies would expire. Cui Dongshu, secretary general of CPCA, said the tax rebate is likely to be terminated by the end of this year, but it remains to be seen whether the 60 billion yuan of tax cut would be used up. 

The State Council issued in April this year a document that included a slew of guidance proposals for further unleashing consumption potential. According to the document, local governments are encouraged to boost sales of new energy vehicles (NEVs) in eligible rural areas.

Affected by the impact of the coronavirus resurgence and supply constraints, China posted a year-over-year decrease of over 40% in both April auto outputs and sales, according to data by the China Association of Automobile Manufacturers. However, the NEV sector still defied the downward movement to reflect a double-digit year-on-year growth in both production and sales volumes.