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China Raises Taxes to Protect Trees, Cut Fuel Use

China is raising consumption taxes on disposable chopsticks and cars, in a move to protect the environment and cut energy consumption. And in Hong Kong, the government is also making luxury goods more expensive, reflecting its goal of narrowing the widening gap between the rich and the poor in the country.

Around 25 million trees are cut every year in China to produce 45 billion disposable wooden chopsticks. Most are used in restaurants and canteens around the country, while about a third are exported to Japan, South Korea and other countries.

Environmentalists warn that at the current rate of timber use, China will soon have no forests left.

To discourage the use of throwaway chopsticks, the Chinese government announced on Wednesday it will impose a five percent tax on them starting April first.

Hahn Chu, with the environmental organization Friends of the Earth in Hong Kong, says the initiative is a step toward protecting China's environment. But he believes that the raise will not deter people from using them and that more action is needed.

"For example, maybe the government take the leading role not to use the disposable chopsticks in the first hand, then the government will lead a very good model for the rest of the people and to the community," he said. "But now in China they only use the tax as a mean or a tool to do it - it's not enough, just only a first and very small step."

Faced with growing pollution and energy shortages, China also will increase taxes on cars with high fuel consumption to encourage the production and use of more efficient cars. The top tax rate for cars with the largest engine will surge to 20 percent from eight percent. Tariffs on cars that have an engine capacity of less than a 1.5 liters will be cut to three percent.

Rising incomes in China's cities have spurred the sale of cars in recent years, making the country the third-largest auto market in the world. About half of the cars used have larger, 1.6 to two-liter engines.

The government said it also will tax a number of luxury goods - a move China's leaders hope will help narrow the gap between the rich and the poor in the country.

Buyers of luxury watches will face a 20 percent tax, while yachts, golf balls and golf clubs will be taxed at a rate of 10 percent. When the consumption taxes were imposed years ago, almost no mainlander would have thought of buying a yacht or playing golf but economic development in the past 20 years have produced millions of wealthy Chinese.

But the government will no longer tax soaps and shampoos. Considered luxury items a decade ago, they are now viewed as daily necessities.