Is the Vehicle and Vessel Tax Related to Engine Displacement?
2 Answers
Vehicle and vessel tax is related to engine displacement, but it does not have a significant impact on the amount of tax payable. The vehicle and vessel tax collection standard is a measure of how much tax is levied. Since the vehicle and vessel tax is a local tax, in addition to complying with the "Interim Regulations of the People's Republic of China on Vehicle and Vessel Tax" and other regulations, the collection standard should also be determined according to the specific management measures formulated by local tax bureaus. Vehicle owners can pay the vehicle and vessel tax at the same time as purchasing compulsory traffic insurance. For passenger vehicles with an engine displacement of 1 liter or less, the vehicle and vessel tax should be levied according to the tax standard for mini passenger vehicles. Additionally, energy-saving vehicles are subject to a 50% reduction in vehicle and vessel tax, while new energy vehicles and vessels are exempt from the tax. The "Vehicle and Vessel Tax" refers to a property tax levied on vehicles and vessels registered with public security, transportation, agriculture, fisheries, military, and other administrative departments in China, calculated based on their type, prescribed tax basis, and annual tax standards. Since July 1, 2007, vehicle owners have been required to pay the vehicle and vessel tax when purchasing compulsory traffic insurance. Starting from August 1, 2018, energy-saving and emission-reducing vehicles that meet the standards are subject to a 50% reduction in vehicle and vessel tax.
Vehicle and vessel tax is absolutely related to engine displacement. I've personally experienced this with the several cars I've purchased. My first car had a 1.0-liter engine, and the annual tax was only around 200 yuan. Later, when I switched to a 2.0-liter SUV, the tax doubled to over 400 yuan. The policy stipulates that higher displacement means higher tax rates. China categorizes displacement into tiers: below 1.0 liters has the lowest rate, 1.0 to 1.6 liters is mid-range, and anything above 2.0 liters carries the heaviest tax. The goal is to encourage energy efficiency and environmental protection—larger-displacement vehicles cause more pollution, so higher taxes help control demand. When buying a car, I always check the official tax tables; small-displacement cars can save a lot of money. Over the long term, considering both taxes and fuel costs, smaller-displacement cars are more economical. I recommend testing cars of different displacements before purchasing, calculating the total cost after a test drive to avoid budget shortfalls. In short, displacement is a key factor in taxation—choosing a smaller-displacement car saves money and is better for the environment.
