China May Offer 10 Percent Tax Break on Hybrid Cars

Hybrid cars have not done well in China. Toyota lowered the price tag on the Prius, but they still expected only 1,500 sales for 2008. Even as other car makers start building hybrid cars in China, including domestic models, hybrid car sales in China have been almost non-existent.

All reports indicate that the Chinese are opting for other cars, but that may be about to change.

Green Car Congress: Report: China To Offer Tax Break For Buyers Of Hybrids and Diesels

The Nikkei reports that China will waive its 10% vehicle purchase tax on hybrids and diesel-engine vehicles.

Currently, when buying an automobile or motorcycle in China, the buyer must pay for the price of the vehicle, which includes a consumption tax of 17%, plus a purchase tax of 10% on the pre-consumption-tax price. This vehicle purchase tax is to be waived for those buying from the government’s list of earth-friendly vehicles, likely starting sometime this year.

This tax break could heighten demand for hybrids, considering that the price gap will shrink between hybrids and versions that run on gasoline only.