The size of your engine will determine what tax you must pay. That is the assessment of China's top legislature after conducting a second reading of a draft law on taxing vehicles and vessels.

At present a one size fits all process is used when it comes to tax and vehicles. If a new tax bill is approved by the National People's Congress Standing Committee during its ongoing session taxes will be charged at seven different levels, depending on the size of the engines. Bigger means you'll pay more while you'll pay less for a smaller car.

Compared with the first draft, taxes on vehicles with engines between one to two liters are reduced in the new draft to avoid significantly increasing the tax burden on drivers.

Zhang Bailin, Vice Chairman of Law Committee, NPC, said, "Cars with engines smaller than 2 liters account for 87 percent of all passenger vehicles. After the adjustment, the nominal tax burden of this group of car owners will not increase. Meanwhile, tax revenues for existing vehicles and vessels will remain basically the same compared with the previous level."

Despite the adjustment, questions still remain. Some lawmakers doubt the effectiveness of the law in promoting energy-saving and environmental protection. Others believe taxation should take into account more factors such as the vehicle price. One law maker says the draft still needs further improvements.

Liu Rujun, NPC Deputy, said, "We should be more prudent in passing the law. The draft still need to go through thorough discussions. It should be more clear in clarifying the purpose and significance of the adopting the law."

The draft is expected to undergo further discussions and be submitted for a vote at the end of the three-day session of the NPC Standing Committee on Friday.

"Compared with the first draft of the tax law on vehicles and vessels, the new draft reflects public opinion to reduce the tax rates for small and mid size vehicles and to ensure the tax burden of most car owners will not increase. But the new measures don't take into account the price of vehicles, but only the size of engine is considered when calculating the tax. Liu Ying, CCTV, Beijing."

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