Legislation Proposed to Ease Tax Burden on Used Car Dealers... Will Consumer Costs Also Decrease?

Assemblyman Jeong U-taek Proposes Amendment to Local Tax Special Cases Act
Used Car Acquisition Tax Exemption Raised from 2 Million to 3 Million Won

[Asia Economy Reporter Lee Hyun-joo] A bill is being promoted to ease the tax burden on small car dealers and reduce the burden on consumers purchasing used cars.

On the 11th, according to the National Assembly, Jeong Woo-taek, Deputy Speaker of the National Assembly and member of the Administrative Safety Committee, introduced the 'Amendment to the Local Tax Special Cases Act' the day before, which reforms local taxes on used cars acquired by car dealers for the purpose of buying and selling.

Jung Woo-taek, Vice Speaker of the National Assembly. / Photo by Yoon Dong-joo doso7@

The amendment raises the full exemption threshold for acquisition tax (7% of the sale price) on used cars acquired by dealers from the current 2 million KRW to 3 million KRW, and extends the grace period for reclaiming already reduced acquisition tax on vans, trucks, and special-purpose vehicles from the current 2 years after purchase to 3 years.

This reflects the criticism that it is unreasonable for car dealers to bear acquisition tax when temporarily acquiring and reselling used cars, as well as the reality that the used car market is struggling due to the recent high interest rates.

Deputy Speaker Jeong said, “Currently, the used car market is facing great difficulties due to weakened consumer sentiment caused by interest rate hikes and increased burdens in using loan products,” adding, “Through this amendment, we hope to protect small business owners engaged in used car sales and to revitalize the used car market by promoting consumption.”