Government officials in Beijing announced an increase in tax on cars that cost more than 1.3m yuan ($189,000; £151,024) earlier this week. Cars in this cost bracket will now attract a 10% tax premium. It is hoped that the tax will curb lavish spending and reduce emissions. On the same day, the Chinese government also unveiled rules for officials saying they should “travel without pomp, minimise impact on public life, and not have vehicles exceeding the set standards”.
The tax came into effect on Thursday and forms part of a wider crackdown on luxury spending and corruption. The additional tax is unlikely to deter many buyers of high end cars. China has traditionally taxed imported vehicles very heavily. Supercar purchasers in China already pay a 35% import tariff, 17% value added tax, a variable emissions tax and a 10% purchase tax.
In many respects, the 10% figure is a compromise. It had been widely reported that China was looking at a figure closer to 20% just a year ago. No surprise that China is one of the most expensive places to purchase a supercar in the world!
Top government officials and business men (who made up the majority of consumers) are increasingly feeling pressure from the government to curb excessive spending. Data seems to indicate that the market for high end cars has shrunk over the past few years. Independent researchers reported that Rolls-Royce sold 946 vehicles in China in 2013 compared to 517 in 2015 while Lamborghini went from 304 vehicles to 133 last year.