A senior official at the China Passenger Car Association (CPCA) has called for reforms to China’s road taxation system, arguing that the rapid growth of new energy vehicles (NEVs) requires a new approach to funding road infrastructure.
Cui Dongshu, secretary general of the CPCA, said the current system, which relies largely on fuel consumption-related taxes, is becoming increasingly outdated as electric vehicles gain market share.
NEV Growth Reshaping the Market
Cui’s comments come as China’s passenger vehicle market continues its transition toward electrification.
According to preliminary CPCA data, new energy vehicles accounted for 63% of passenger vehicle retail sales in China in May, setting another record for market penetration.
As more consumers switch from gasoline-powered vehicles to battery-electric and plug-in hybrid models, revenue generated through fuel-related road taxes is expected to decline.
Concerns Over Existing Tax Structure
In an article published on his personal WeChat account, Cui argued that the traditional model creates an imbalance because owners of internal combustion engine vehicles contribute to road maintenance through fuel taxes, while many NEV owners effectively avoid those charges despite using the same infrastructure.
He also noted that electric vehicles are often heavier than comparable gasoline-powered vehicles because of their battery packs, potentially increasing road wear.
Cui said the changing vehicle fleet composition highlights the need for a revised framework that more closely reflects actual road usage.
Proposal for Usage-Based Road Taxation
Cui suggested creating a statutory vehicle road use tax supported by data from China’s Beidou satellite navigation system and national vehicle monitoring platforms.
Under the proposal, taxes would be calculated using factors such as:
- Vehicle mileage
- Vehicle weight
- Operating conditions
- Road usage patterns
The proposed framework would replace traditional flat-fee approaches with a more usage-based system.
Tax-Free Allowance for Private Drivers
Cui emphasized that any future road tax system should avoid increasing costs for ordinary households.
He proposed introducing an annual tax-free mileage allowance for private vehicles, allowing most families to continue daily commuting and short-distance travel without incurring additional tax burdens.
“The core principle is to encourage consumption and benefit the people,” Cui wrote.
Commercial Vehicles Could Face Higher Charges
The proposal also recommends differentiating between private and commercial vehicles.
Under Cui’s vision, commercial fleets such as freight trucks and passenger transport operators would bear a larger share of infrastructure costs due to their higher mileage and greater impact on road wear.
The approach would seek to ensure that vehicles generating greater infrastructure demand contribute proportionately to maintenance funding.
Gradual Rollout Suggested
To minimize disruption, Cui proposed a phased implementation process beginning with pilot programs in regions that already have high NEV adoption rates.
Hainan was cited as a potential testing ground because of its advanced electrification efforts and mature EV market.
Lessons from pilot projects could then be used to refine the framework before any broader national rollout.
Looking Back at Previous Reforms
Cui compared the proposal to China’s 2008 road maintenance fee reform, which replaced direct road maintenance charges with fuel taxes.
He argued that the earlier reform helped support vehicle consumption and economic activity while simplifying the taxation system.
According to Cui, a modernized road taxation framework could similarly help balance infrastructure funding needs with continued support for vehicle ownership and consumer spending as China enters a new phase of transportation electrification.
Source: CnEVPost
