By Jung Min-ho
Taxes on luxury imported cars are likely to go up, with lawmakers and the government seeking a law revision to impose taxes based on prices instead of engine displacement.
Rep. Shim Jae-chul from the ruling Saenuri Party proposed a revision of the law earlier this week, saying the current system was unfair and did not reflect technology advances.
“The current volume-based tax system could be unfair,” he said. “With the development of technology, car owners with lower engine displacement, higher performance and higher price pay less tax than drivers with lower priced, low-performance cars.”
According to the current law, 80 won per cubic centimeter (cc) is imposed for cars with displacement less than 1,000 cc, 140 won for cars with displacement between 1,000 and 1,600 cc, and 200 won for cars with displacement over 1,600 cc.
For example, BMW 520d owners pay almost the same amount of vehicle taxes as those driving such local brands as Hyundai Motor’s Sonata midsize as they are in the same segment in terms of engine displacement. The price of the German vehicle is about three times higher than the Korean car.
Also, many lavish cars nowadays are designed with smaller displacements to burn less fuel or run a hybrid engine. Shim said a growing number of electronic cars are another factor to consider.
Speaking to lawmakers during an annual National Assembly audit, Thursday, Interior Minister Chong Jong-sup said the government is also reviewing the details of the revision.
Once the National Assembly passes the bill, the change will likely slow the growth of foreign car brands sales here as it will give further price competitiveness to Korean automakers including Hyundai.
The market share for foreign automakers in the country in the first half of this year hit an all-time high of 16.6 percent with sales of 119,832 cars, a 27.1 percent rise from a year earlier.