Proposal for Vehicle Taxation System

Under the current Local Tax Act, the vehicle operation taxes are imposed according to the engine displacements*. However, it is concerning that under the system based on the displacements, more tax is imposed on the owner of the low-priced vehicles than on the owner of the high-priced imported vehicles. To enhance the vehicle tax system, the ruling Democratic Party proposed to tax vehicles according to the vehicle price and carbon emissions. But this proposal has caused controversies in the industry, as more tax will likely be imposed on the owners of high-priced imported vehicles, and also it is not allowed to revise the tax system under the KOR-US FTA.

<Current Standard Tax Rates for PCs of Non-business Use under Article 127 of Local Tax Act*>