BEIJING, March 23 -- China is hitting its carmakers with higher taxes on gas guzzlers and cutting levies on small-engine cars in a bid to save energy and curb pollution.

    The new taxes - in some cases rising from 5 percent to 20 percent on the value of the vehicle - will go into effect on April 1, the Ministry of Finance said on its Website.

    Domestic carmakers will pay the fees as soon as the vehicle rolls off the assembly line, and imports will be taxed when they are picked up from customs.

    Rolls Royce and other luxury carmakers whose buyers are more resistant to price swings say they'll pass the increase on to consumers. Most other carmakers contacted yesterday said they're still considering possible price adjustments.

    Sport utility vehicles with big power plants will be hit the hardest. Taxes on SUVs with engines bigger than 2 liters will be raised from the present 5 percent to between 9 and 20 percent, depending on engine size.

    Whopping tax increases also target sedans with engines larger than 2.5 liters. The levies on those cars will jump from the present 8 percent to between 9 and 20 percent.

    At the other end of the scale, taxes will be reduced from 5 percent to 3 percent on compact cars with 1.5-liter or smaller engines.

    The state will also offer tax breaks to owners of energy-efficient hybrids powered by gas engines and electric motors.

    And taxes for motorcycles with small engines were cut from 10 percent to 3 percent.

    The tax changes are part of the government's plan to encourage the production of vehicles that are more energy efficient and create fewer emissions.

    "The new regulations aim to limit the use of big-engine vehicles," said Zhang Xin, an auto analyst at Guotai Jun'an Securities Co.

    Zhang said wholly owned domestic automakers, joint venture car producers and importers are likely to pass on the higher taxes to customers.

    BMW, Mercedes Benz and Audi, three luxury carmakers whose premier models are equipped with engines larger than 2.5 liters, said they were still considering what to do about the tax hike.

    Others such as Rolls-Royce Car Corp and Volvo Car China said they will raise sticker prices because their customers are not price sensitive.

    "We will decide whether to raise our price according to the response of the market and our competitors," said a spokesman for Great Wall Motor Corp, China's biggest SUV maker.

    The majority of the cars sold in China will see little, if any, effect from the tax changes, however.

    Cars with engines larger than 2.5 liters account for only 20 percent of all the autos sold in China, and those exceeding 3 liters account for 10 percent.

    (Source: Shanghai Daily)