The Vehicle and Vessel Tax Law, effective Jan. 1, will levy moderately higher taxes on passenger vehicles with an engine size between 2 liters and 2.5 liters and much higher taxes on those with an engine size above 2.5 liters, while tax rates for those with an engine size below 2 liters will be marginally lowered or kept unchanged, an online statement from the State Administration of Taxation said Sunday.

According to a second draft to the law earlier this year, taxes on vehicles with engine capacities from 1.0 liter to 1.6 liters dropped from 360-660 yuan (57-104 U.S. dollars) to 300-540 yuan. Meanwhile, taxes on vehicles with engine capacities of 1.6 liters to 2.0 liters dropped from 660-960 yuan to 360-660 yuan.

This means that the tax burden for owners of vehicles with smaller engine capacities of 2.0 liters or below will not be increased from the current rate.

Electric vehicles and hybrids are excluded from paying the tax under the regulation, which indicates the nation's policy orientation toward environmental protection and energy saving, the statement said.

The law stipulates passenger vehicles, commercial vehicles, trailers, motorcycles, and vessels as taxable under the law. Foreign-based vehicles and those from China's Hong Kong, Macao, and Taiwan are also excluded from the tax.

The new regulation has kept the original tax rates for freight vehicles, motorcycles, and vessels. However, for yachts, a tax range between 600 yuan and 2,000 yuan per meter of the length of the yacht will be applied.