China's cabinet agreed in principle on Wednesday to raise the consumption tax on cars with large engines in order to help save energy.

The State Council did not provide details on when or by how much it would increase the tax, but it said that such a move was needed to contribute to the country's energy efficiency drive.

"With the acceleration of industrialization and urbanization, the tight energy supply is becoming one of the major obstacles hampering our economic and social development," the cabinet said on its website.

It added that energy-efficient automobiles would be given preferential tax treatment, and said that it would make sure polluting old automobiles were taken off the streets and that public transportation would be ramped up.

China, trying to make its economic growth greener, has set a goal of reducing energy intensity by 20 percent between 2006 and 2010.

But China heavily subsidizes fuel, meaning there is little incentive for status-conscious consumers to buy efficient car models rather than gas-guzzling sedans.

The cabinet also passed a draft order on energy efficiency in buildings to encourage the use of new technologies and materials in the construction of homes and offices. Details of the plan are yet to be finalized.

(Shanghai Daily July 24, 2008)