Local tax authorities in Beijing have decided to suspend the vehicle and vessel tax originally scheduled to begin July 1.

This move is remarkable because it displays the policymakers' willingness to listen to public opinion. More important, it gives local tax authorities the opportunity to better align their policy with the national strategy of conserving energy and protecting the environment.

China began to enforce the Interim Regulations on Vehicle and Vessel Tax on January 1. The interim regulations replaced the vehicle and ship license plate tax and vehicle and vessel use tax collected for decades.

The Beijing municipal government spent half a year developing detailed rules on implementing the country's interim regulations on vehicle and vessel tax. Yet, when recently released, the draft rules drew strong public opposition for raising the tax on all sedan cars from 200 yuan (US$26) to 480 yuan (US$63) a year. The new vehicle and vessel tax was raised, according to the State Administration of Taxation, to help implement the State's policies on energy saving and environmental protection.

As the nation accelerates its pace to go mobile, the growth in the number of privately owned vehicles has led to an increase in emission discharges and put heavy pressure on China's energy supply and the environment.

A hike in the vehicle and vessel tax is highly recommended since it can help raise public awareness of the increasing environmental cost the country is paying.

Opposition by some car-owners to a hike in the vehicle tax might be dismissed as just a selfish reaction. But the suggestion by many people that small and energy-efficient cars should be taxed less than big oil-guzzling cars does justify serious consideration by tax authorities. A greener tax policy is needed to reward energy-saving consumers.

The country has drawn up a series of plans to raise energy efficiency and cut polluting emissions. The success of these plans, to a large extent, depends on aggressive local implementation.

The new vehicle and vessel tax may not be a big issue in terms of the amount of the tax, but local tax authorities can seize the chance to make taxation polices greener.

(China Daily July 2, 2007)