The Ministry of Finance and the General Administration of Taxation have decided to lower the consumption tax on passenger car tyres to 3 per cent from its current rate of 10 per cent.

The ministry also introduced new tax rates for automobiles, ranging from 3 per cent to 20 per cent depending on engine size. Cars with engines at or below 1.5 litres will have to pay a 3 per cent charge, but this will rise to 20 per cent for engines of 4.0 litres or above. The tax rate for “light and medium-sized business passenger vehicles” will be 5 per cent, according to the ministry. Motorcycles with engines at or below 250cc will have to pay a 3 per cent tax rate while motorbikes larger than this will have to pay 10 per cent.

Any of China’s new millionaires hoping to get a tax break on some of the finer things in life will be disappointed by this announcement. The government will also introduce a 10 per cent tax on yachts, golf balls and golf clubs, and a 20 per cent tax on luxury watches, it said.

The Ministry of Finance said the plan has been approved by the Chinese Government and was designed to control and regulate energy consumption and narrow the gap between rich and poor by collecting a consumption tax on the luxury items.