- Cui proposes a statutory tax based on driving mileage and vehicle weight to address structural imbalances caused by declining fuel tax revenues.
- Cui suggests piloting the reform in typical regions with high NEV penetration and mature markets, such as Hainan.
Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), suggested that China should reform its road tax system to adapt to the rapid development of the new energy vehicle (NEV) era.
The traditional road tax system, which relies on fuel consumption, has shown obvious structural imbalances, and an upgrade of the tax system is imperative as NEVs gradually become the main driver of sales, Cui urged in an article published on his personal WeChat account on Wednesday.
The call comes as the energy structure of China's auto market undergoes disruptive changes. Preliminary data released by the CPCA on Wednesday showed that the retail penetration rate of passenger NEVs in China rose to 63% in May, continuing to hit new record highs.
For a long time, fuel vehicle users have indirectly paid road maintenance taxes through refueling. However, NEVs consume no fuel and have long used public road resources with zero tax burden, Cui wrote.
In addition, due to the power batteries they carry, NEVs are generally heavier than fuel vehicles of the same class, which leads to higher actual wear and tear on the roads, he said.
To address this unfairness, Cui suggested establishing a statutory vehicle road use tax, relying on data from China's Beidou navigation satellite system and the national vehicle supervision platform.
Cui envisions building a comprehensive tax calculation mechanism based on mileage, vehicle weight, and operating conditions, abandoning the traditional one-size-fits-all collection model of road maintenance fees.
The core principle is to encourage consumption and benefit the people, Cui stressed, adding that the new tax system must not increase the burden on ordinary families using cars for commuting.
He suggested setting an annual tax-free mileage quota for private cars, which would ensure a zero tax burden for the vast majority of families' daily commutes and short-distance trips.
He recommended that the new policy strictly distinguish between private commuting cars and commercial vehicles. Vehicles with high-frequency driving and heavy-load wear, such as freight trucks and commercial passenger buses, would bear the corresponding public infrastructure costs.
This policy of separating commercial vehicles from private cars aims to hold operating vehicles accountable while allowing private cars to enjoy inclusive benefits.
To ensure a smooth transition of the policy, Cui suggested adopting a gradual implementation path. He proposed piloting the reform first in typical regions with high NEV penetration and mature markets, such as Hainan.
After refining the details and accumulating experience, the new tax system would then be steadily rolled out nationwide to minimize the impact of policy fluctuations on consumption.
Cui recalled the 2008 reform that replaced road maintenance fees with taxes, noting that the policy successfully activated mass auto consumption and offset downward economic pressure at the time.
He hopes that the new round of tax system iteration will play a similar role, ultimately achieving a win-win situation with no burden on residents, vibrant consumption, and guaranteed infrastructure funding.
