BYD Chairman Wang Chuanfu recently said that the Chinese government is considering a new gas tax, the proceeds of which will be used to promote electric vehicles. The Wall Street Journal reports that even a tax as low as 0.2 yaun (about 12 cents) per liter could bring in billions of dollars in revenue.
Currently, local and national taxes make up about 30% of the cost of gasoline across much of China, with the cost averaging about $1.26 per liter, or just under $5.00 a gallon. The money raised from the new tax could then be used to directly promote EVs, which the government has acknowledged as the cornerstone of its plan to reduce emissions and smog that is choking most of its major cities and causing serious health concerns.
The Chinese government has become a major purchaser of electric vehicles from companies like BYD, but the population at large hasn’t gotten on the wagon yet due to a lack of charging stations and range anxiety. China’s answer is a $16 billion campaign to install EV chargers in and around major cities and a range of tax incentives designed to lower the cost of “new energy” vehicles.
It’s akin to the tax on cigarettes, which was then used to mount an aggressive anti-smoking campaign that has seen cigarette use plummet among adults and youths alike. China has shown over the past two decades that when it puts its collective efforts to something, big changes are possible. A recent example is the campaign to reduce the consumption of shark fin soup, which has seen consumption of the controversial delicacy reduced by some 70% since it went in effect last December.
This tax is far from a certainty, but given the Chinese government’s rush to reduce air pollution, I wouldn’t put it past them. Hell, it sounds like a pretty good idea to me; tax gas cars to get people into EVs?
It worked in Norway, it should work in China, and it could probably work here too.