China will adjust its vehicle tax rates from Sept. 1 to favor smaller-capacity, more fuel-efficient engines that will cut energy use and reduce emissions, according to a joint online announcement by the Ministry of Finance (MOF) and State Administration of Taxation on Wednesday.

The tax on cars with engine capacities of 3 to 4 liters will rise to 25 percent from 15 percent, with the rate for engines of more than 4 liters doubling to 40 percent.

The rate on cars with engines that are 1 liter or less will fall from 3 percent to 1 percent.

"We hope the new policy will help restrain the production and sales of high-emission vehicles while promoting the development of low-emission cars," said MOF.

The ministry said the policy was part of an ongoing national campaign to cut energy intensity by 20 percent and major emissions by 10 percent between 2006 and 2010.

The announcement came after the State Council, or the Cabinet, released a circular focused on oil conservation on Aug. 2, in which it pledged to adjust car consumer taxes without giving further details.

(Xinhua News Agency August 13, 2008)