Seoul to overhaul vehicle classification system, EVs likely face spike in taxes

2021.04.05 15:18:13 | 2021.04.05 15:18:42

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The South Korean government will revisit its vehicle classification standard, untouched from 1987, to better represent mobility market changes driven by electrification and automation.

The government will commission a study on the vehicle type classification under the Vehicle Management Act, which is the basis for vehicle registration management and designation of safety standards to draw a conclusion within this year with a goal of completing necessary enactment next year, the Ministry of Land, Infrastructure and Transport said on Sunday.

Under the current standards established in 1987, electric vehicles and hydrogen fuel cell vehicles cannot belong to any class because the motor-driven cars have no combustion engine whose displacement serves as a basis for classification. Such eco-friendly vehicles are unavoidably categorized by their size or the physical area they cover. But this causes a problem of equity in tax payment. For example, a combustion engine supercar is classified as a large vehicle due to their usually big displacement despite a small car size, whereas an electric supercar is classified as a mid or small car despite their strong power.

The standard classification is highly likely to lead to a change in the car tax system, which is based on engine displacement. An owner of a Mercedes E300 model priced at 63.5 million won ($56,300) pays less car tax than a Sonata owner priced at 23.9 million won just because the former car has a smaller engine displacement.

By Seo Jin-woo, Yang Yeon-ho and Minu Kim

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