China Attempts To Reduce Population, Consumption

In addition to helping the environment by reducing consumption and conserving resources, the increased consumption tax is also aimed to reduce the gap between rich and poor.

"'This is part of the government's strategy of rebalancing growth and reducing energy demand,' said Ben Simpfendorfer, a strategist with the Royal Bank of Scotland in Hong Kong.

'The government wants to show that it is doing something to increase the tax burden on the richer segment of the population
to reduce the widening disparity between the rich and poor.'

"The government has raised the tax on cars with engines bigger than 2 litres from 8% to 20%, as it looks to reduce pollution and oil consumption.

Cars with smaller engines, between 1 and 1.5 litres, will have their taxes cut to 3% from 5%.

China is now the world's third-biggest vehicle market after the US and Japan, and this has driven up its oil consumption. Cars now account for one-third of China's oil use. "