Preferential policies will be withdrawn from the National Development and Reform Commission The Department of Industrial Coordination recently revealed that the purchase tax preferential policies for small-displacement passenger cars will be abolished in 2011, and the subsidy policies for car-to-country and car-to-town replacement policies may shrink or be cancelled. The trade-in policy will expire on December 31. The deadline for processing applications for subsidies is January 31, 2011, and it is probable that it will no longer be implemented in 2011.
At the beginning of 2009, the State issued a notice to purchase passenger vehicles with a displacement of 1.6 liters and below from January 20, 2009 to December 31, 2009, and impose vehicle purchase tax at a 5% rate. Beginning this year, the state will adjust the purchase tax preferential policies for vehicles with a low emission of 1.6L or less (including 1.6L) to be reduced by half, and will be reduced by 2.5%, that is, 7.5%. The automobile trade-in policy was launched in June 2009. At that time, people who stipulated that they would scrap their old cars and purchase new ones in advance could enjoy a subsidy ranging from RMB 3,000 to RMB 6,000. The subsidy period was one year. On December 31, 2009, the standard of subsidies for the replacement of cars was raised, and the maximum amount of subsidies was 18,000 yuan. On June 13, the Ministry of Commerce issued a notice that the vehicle replacement policy was extended until December 31, 2010.
If the two preferential policies are cancelled next year, consumers who purchase a 1.6L or lower displacement vehicle with a price of 100,000 yuan will pay at least 2,317 yuan more than the purchase tax portion in 2010. If consumers trade for new cars, then consumer spending will increase by nearly 20,000 yuan.
Affected by the impending cancellation of preferential policies, many people buy cars in advance. According to the latest data released by the China Association of Automobile Manufacturers, in October, sales of passenger cars of 1.6 liters and below were 841,200, an increase of 2.17% from the previous month and an increase of 28.15% over the same period of the previous year. Passenger cars of 1.6 liters and below accounted for passenger cars. The total share of 69.91%, and higher than last year's level, the market share of such models has been rising for 3 consecutive months. According to the latest information from the Ministry of Commerce, in November 2010, the nationwide subsidy for vehicle replacement was 63,000 vehicles. The single-subsidy amount reached a new high since the implementation of the car replacement policy, which was a 66% increase from October.
The subsidy policy for new energy vehicles will be replaced by a gradual withdrawal of the preferential policies for traditional cars, and some large and medium-sized cities are also brewing to introduce more stringent restrictions on car consumption policies. In order to solve the traffic problem, the experts suggested that administrative measures should be used to impose blocking measures on the purchase of cars, and to raise the purchase tax and increase the cost of the first purchase. China Merchants Securities analysts pointed out that the decision to withdraw from the preferential purchase tax policy during the year and the greater traffic pressure in the first and second-tier cities has made the industrial policy no longer relaxed.
The automobile industry policy continues to shrink, replaced by a new energy automobile policy that aims to guide consumers to purchase hybrid and electric vehicles. In June this year, the "Circular on Implementing Private Subsidy for Subsidies for New Energy Vehicles" was released. Pure electric vehicles were identified as new energy vehicles that meet the conditions for the development of China's major new energy vehicles. Subsidies were granted at 3,000 yuan/kWh. The maximum subsidy for each type of hybrid passenger vehicle is 50,000 yuan, and the maximum subsidy for pure electric passenger vehicles is 60,000 yuan per vehicle. Since then, local governments have introduced subsidy policies for the purchase of new energy vehicles. On the basis of state subsidies, local subsidies range from 1 to 20,000 to as many as 30,000 to 40,000. Orient Securities analyst pointed out that the subsidy policy can see the development path of new energy vehicles. The withdrawal of traditional car incentives can increase consumer enthusiasm for buying new energy vehicles.
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