China slaps 10% tax on supercars to curb luxury
China is introducing a 10 percent tax on cars such as Ferrari GTC4Lusso, Bentley Bentayga and Aston Martin DB9 in a bid to combat conspicuous consumption and promote more fuel-efficient vehicles.
Buyers of autos costing 1.3 million yuan ($189,000) or more will be hit with the tax starting today, according to the Ministry of Finance. The levy on “super luxury” vehicles is meant to “guide reasonable consumption,” lower emissions and save energy, the ministry said in a statement on its website.
The tax is China’s latest move to tone down spending by the country’s growing ranks of wealthy consumers. While the additional cost will be a limited deterrent for people willing and able to spend vast sums on a car, it’s another drag on these vehicles just as they were showing signs of recovery amid President Xi Jinping’s calls for thriftiness. It also comes as the government considers extending a tax cut on smaller cars due to expire this month.
“The tax increase is a display of the government’s attitude of advocating frugality,” said Cui Dongshu, secretary-general of the Passenger Car Association. “The increase in taxes on luxury cars may help make the extension of the small-car tax cut more likely given it is in line with the government policy of promoting cars with better fuel economy.”
Carmakers played down the impact, saying the tax hike would only impact a small number of models, while executives said wealthy Chinese buyers were unlikely to be put off by a relatively marginal price hike on already expensive cars.
Manufacturers of ultra-luxury vehicles have been shifting their lineups in recent years to appeal more to Chinese buyers, who generally prefer large autos over sports cars. Rolls-Royce and Aston Martin are both planning their first SUVs, following Bentley’s lead with the Bentayga, which starts at 3.98 million yuan in China.
Lamborghini, which counts China as its second-biggest market, sold more than 2,000 vehicles through June this year, a record tally for the carmaker. The Italian supercar maker also is planning to begin sales of the Urus SUV next year.