China said Tuesday it would increase the purchase tax for small passenger cars next year, as authorities continue to wind back stimulus measures introduced to combat the global financial crisis. Expectations that the government would soon scrap the tax cut has fuelled demand for cars in the world's biggest auto market, with total sales accelerating in November from the previous month.
The finance ministry said the purchase tax for passenger cars with engines of 1.6 litres or less would be set at 10 percent from January 1. Beijing, seeking to bolster the auto sector during the global downturn, had halved the purchase tax from 10 to five percent in January 2009. It raised the tax to 7.5 percent this year.
China's auto sales, which are already at record levels for the year, gathered pace in November as the total for the first 11 months sped past 16 million units, data from an industry group showed earlier this month. A total of 1.7 million units were sold in November, up 26.9 percent from a year earlier, the China Association of Automobile Manufacturers said.
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