Local cyclists will no longer be required to pay an annual tax on their bicycles, which many never bothered to pay in the past, the city's tax bureau announced Tuesday.
Bike owners will still need to register their bikes and get a license plate when they buy the vehicle, local authorities said.
The bureau said many people have suggested the bicycle tax reform over the past few years.
For nearly 20 years, residents who owned a bike or other non-motor vehicles, such as an electric moped, were supposed to pay an annual tax of 8 yuan (96 US cents).
A national tax law enacted in 1986 gave local authorities across the country the right to decide whether or not to collect a tax on bikes. The local tax bureau, along with tax bureaus from 11 other cities and provinces, chose to charge the fee.
At the time, bikes were considered expensive luxury items, but with the city's rapid economic growth over the past decade, they have become cheap vehicles used by many students and migrant workers.
The tax no longer serves the function it was created for, which is one of the factors behind the decision to ax it, according to tax bureau officials.
The bureau also said the tax wasn't cost-efficient as few people bothered to pay it.
Officials said while there are about 12 million registered non-motor vehicles in the city, most of which are bikes, but only about one in seven owners bothers to pay the tax. The tax accounted for far less than 1 percent of the bureau's revenues last year.
Despite the small number of people paying the fee, authorities had to invest a great deal of money to hire tax coordinators to collect and advertise the tax during the first four months of every year.
"Though bikes are no longer expensive property, they are still the major traffic access for millions of commuters in the city, especially people with low and medium incomes. The new policy means to benefit this group," said a bureau official.
Tax officials also said dropping the levy is in accordance with the city's efforts to promote the use of environmentally friendly vehicles.
A number of other cities and provinces canceled their bike taxes in recent years.