Gold medal idea: China raises tax on large cars, cuts tax on small cars

With the world intently watches the Olympic Games currently taking place in Beijing, China, the country's policy-makers are concerned with the quality of the city's air. As has been widely reported, Beijing took drastic measures to ensure that its air quality was safe for the world's best athletes, including cutting its traffic in half through unique licensing measures. But, what is to happen after the games are through? Will the city revert back to its previous emissions-spewing ways? That's the question that's on both the minds of both the outside world and Chinese officials themselves. In order to promote the sale of smaller, more efficient vehicles, the country's Finance Ministry has decided to raise its taxes dramatically on vehicles with engines larger than 4.0-liters, with a slightly smaller but still significant increase on cars with engines between 2.0 and 4.0-liters. On the flip side, cars with engines displacing less than 1-liter get their taxes dropped by a third to just 1-percent. The hope is that consumers will choose to purchase cars with smaller engines, as there is rapid growth in both the large car and SUV market segments.
[Source: Elaine Kurtenbach / Associated Press via The Detroit News]