Beijing is planning to increase significantly the tax on passenger car engines larger than 2.5-litres while reducing or exempting the tax on cars with energy saving engines, according to the Xinhua News Agency. The annual tax was introduced in 2007.

The draft proposals would also raise the tax on cars with engines between 1.6-2.5-litres from the current range of CNY360 to CNY660 (US$54-70). It didn't specify the new higher level, but said the law 'would raise the tax moderately based on current levels.'

The changes were due to be discussed by lawmakers on Monday this week.