October 29, 2018 / 10:37 AM / 19 days ago

China regulator to propose 50 percent cut to car purchase tax: Bloomberg

A cyclist rides past cars that are waiting at a traffic light in central Beijing, China October 29, 2018. REUTERS/Thomas Peter

(Reuters) - China’s top economic planning body is proposing to cut the tax levied on car purchases by half, as the impact of an escalating trade war with the United States threatens to slow the Chinese economy and affect demand for vehicles, Bloomberg reported on Monday.

Shares of American and European automakers including General Motors (GM.N), BMW (BMWG.DE), Volkswagen (VOWG_p.DE) and Daimler (DAIGn.DE) extended gains following the report.

Reuters reported reut.rs/2RmNyto earlier this month that the China Automobile Dealers Association (CADA) has submitted documents to the country's finance and commerce ministries proposing the 10 percent auto purchase tax be halved.

CADA has made proposals in previous years that have helped shape auto policy.

China’s car sales fell by 11.6 percent to 2.39 million units last month, the most in nearly seven years, stoking concerns that the world’s biggest auto market could contract for the first time in decades this year.

When China last cut the purchase tax three years ago, car sales soared in the world’s biggest auto market that is a key battleground for global car makers from GM to Toyota Motor (7203.T).

Reporting by Ankit Ajmera in Bengaluru; Editing by Shailesh Kuber

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