HONG KONG - Hong Kong's financial chief John Tsang proposed to increase the rate of each tax band for the first registration tax for private cars by about 15 percent when delivering his budget speech on Wednesday.

Tsang said that private cars account for over 60 percent of the vehicle fleet in Hong Kong. The year-on-year increase of private cars in 2010 hit 5.4 percent, a record high of more than a decade. The number of private cars first registered in 2010 surged to more than 41,000.

Despite all the road improvement works to ease traffic congestion, average vehicle speeds on all strategic roads across the territory decreased by over 5 percent in 2010, said Tsang, who added that the government must take decisive measures to curb the growth of private cars.

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"I propose to increase the rate of each tax band for the first registration tax for private cars by about 15 percent," he said, while the first registration tax for other types of vehicles and the existing concession for electric vehicles and environment- friendly petrol private cars will remain unchanged.

According to Tsang's suggestion, on the first HK$150,000 ($19,250) of taxable value of private cars, the tax rate will be raised from 35 percent to 40 percent; on the next HK$150,000, the rate will be increased from 65 percent to 75 percent; on the next HK$200,000, the rate will go up from 85 percent to 100 percent; on taxable value over HK$500,000, the rates will jump from 100 percent to 115 percent.

The above adjustments will be gazetted and take immediate effect on Wednesday, Tsang said, adding that the proposed measure is intended to relieve traffic congestion instead of raising tax revenue.