Beijing drives super car tax up 10% in move to curb ostentatious spending

China has slapped extra tax on super-luxury cars, such as Ferraris, Bentleys and Lamborghinis, as part of a four-year campaign to fight corruption and improve the government’s image.

The treasury ministry announced a 10 per cent tax on any car costing more than Rmb1.3m ($190,000). The levy is meant to “guide reasonable consumption”, lower emissions and save energy, the ministry said.

State news agency Xinhua also unveiled rules for officials saying they should “travel without pomp, minimise impact on public life, and not have vehicles exceeding the set standards”. It was not clear whether the double announcement was deliberate or a coincidence.

Analysts said the tax rise would barely affect demand for expensive cars such as the Ferrari GTC4Lusso or the Aston Martin DB9. Cars priced above Rmb1.3m were already charged a 35 per cent import tariff, value added tax, a variable emissions tax and even a 10 per cent purchase tax that makes China one of the most expensive places to buy an imported car.

But Yale Zhang of Automotive Foresight Shanghai, a consultancy, said the move was likely to be meant as a ­“signal” to be more frugal and less ostentatious as part of President Xi ­Jinping’s anti-corruption crusade.

All luxury car brands have seen a fall in demand in China due to the austere environment for officials and even top businessmen who are now under pressure not to flaunt their wealth. “People are being encouraged not to show off too much,” said Mr Zhang.

Rolls-Royce sold 946 vehicles in China in 2013, while in 2015 the number nearly halved to 517. Lamborghini went from a peak of 304 vehicles to 133 in China sales last year, according to data by LMC Automotive. Janet Lewis of Macquarie Securities in Tokyo said that while China was a very important ­market for luxury car makers, that segment “is a really small part of the total industry”.

Super-luxury cars came to symbolise the excesses of the Chinese political leadership. In 2012, the son of senior official Ling Jihua crashed a Ferrari while street-racing. He was killed, while one of two semi-clothed women in the car with him also later died. That scandal set off a chain reaction in which Mr Xi has sought to steer public disgust with official excess into his anti-corruption campaign.