China's top legislature Monday began reviewing for the first time a draft law on vehicle and vessel taxation, as a bimonthly legislative session began.

The draft law sets out provisions for reducing taxes on energy-saving and clean energy-powered vehicles while imposing more taxes on cars with big engines.

Currently, the tax on passenger vehicles in China ranges from 360 yuan ($54) to 660 yuan ($97) per unit.

Taxes on vehicles with engines smaller than 1.6 liters - which account for 58 percent of Chinese passenger cars, defined as autos with a seating capacity of less than nine passengers - will be reduced slightly or be kept unchanged, Chinese Finance Minister Xie Xuren said in his report to Monday's meeting.

Taxes on cars with engines bigger than 1.6 liters but smaller than 2.5 liters will see a "moderate" increase in taxes while a "relatively large" increase will be imposed on cars with engines larger than 2.5 liters, he said.

Taxes on vessels will remain unchanged while taxes on motorcycles, three-wheel motor vehicles and low-speed trucks mainly used in rural areas will be reduced or remain unchanged, according to the draft law.

The draft law also stipulates that owners of energy-intensive and highly-polluting cars and vessels will have to pay more tax.

Details regarding the draft law's tax standards were not made public at Monday's meeting.

The draft law, passed at an executive meeting of the State Council, China's cabinet, on October 12, is set to replace the current tax law on vehicles and vessels which took effect in 2007.

The 17th Session of the Standing Committee of the 11th National People's Congress (NPC) will run until Thursday.

China has 199 million motor vehicles on its roads, including more than 85 million automobiles. China defines motor vehicles as motorcycles, tractors, trucks and cars.

(CNTV.cn, Xinhua News Agency October 26, 2010)