Hong Nam-ki: "LPG and Hybrid Cars to Be Excluded from Low Emission Vehicles in 2-3 Years... Excise Tax Reduction Extended"

The 19th Innovation Growth BIG3 Promotion Meeting

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is speaking while presiding over the 19th Innovation Growth BIG3 Promotion Meeting held at the Government Seoul Office on the morning of the 24th. 2022.2.24 Photo by Yonhap News

[Asia Economy Sejong=Reporter Son Seon-hee] The government has decided to restructure purchase subsidies and tax support for low-emission vehicles within the next three years to focus on zero-emission vehicles such as electric and hydrogen cars. Consequently, LPG and CNG vehicles as well as hybrid vehicles, which have previously received benefits as 'eco-friendly internal combustion vehicles,' will be excluded from the low-emission vehicle category and will no longer be eligible for various benefits. However, individual consumption tax reduction benefits will be extended until they are excluded from the low-emission vehicle category.

On the morning of the 24th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, held a meeting on the promotion of the Innovation Growth BIG3 (future cars, bio-health, system semiconductors) at the Government Complex Seoul and stated, "Since 2005, eco-friendly internal combustion vehicles have been supported as 'low-emission vehicles and eco-friendly vehicles,' but in line with improvements in vehicle supply environments such as diversification of vehicle types and expansion of charging infrastructure, we plan to restructure purchase subsidies and tax support to focus on electric and hydrogen vehicles."

He added, "LPG and CNG vehicles will be excluded from the low-emission vehicle category starting in 2024, and hybrid vehicles will be excluded from 2025 or 2026. However, support for parts suppliers will continue considering greenhouse gas reduction effects and price competitiveness."

Deputy Prime Minister Hong also said, "We plan to actively consider extending the individual consumption tax reduction period for hybrid, electric, and hydrogen vehicles, which is scheduled to be applied until the end of this year, by 2 to 3 years in connection with the restructured low-emission vehicle classification system." Currently, individual consumption tax is fully exempted within certain limits for each vehicle type: 1 million KRW for hybrid vehicles, 3 million KRW for electric vehicles, and 4 million KRW for hydrogen vehicles.

Furthermore, to commercialize autonomous vehicles, the government plans to pilot the next-generation intelligent transportation system on highways by next year and designate at least one autonomous vehicle pilot operation zone in each city and province to expand related infrastructure.

This year, private facility investments totaling 66 trillion KRW are expected in industries related to the BIG3. Deputy Prime Minister Hong stated, "We will closely support the smooth execution of investment plans and focus on strengthening vulnerable areas through building cooperative ecosystems between fabless-foundry, semiconductor-future car companies, and industries."

He also said, "To strengthen the semiconductor industry's super-gap and leap to a comprehensive semiconductor powerhouse, we will focus on new projects in three directions starting this year: research and development (R&D) of promising demand items, nurturing core talents, and improving the manufacturing value chain. First, we will promptly proceed with new R&D projects this year such as power semiconductors (7.2 billion KRW), AI semiconductors (29.9 billion KRW), and advanced sensor development projects (15.3 billion KRW), and additionally prepare a comprehensive development strategy for power semiconductors and apply for a preliminary feasibility study within this year."

Regarding the bio-health sector, he added, "To capture the rapidly growing digital healthcare service market, which is driven by aging, an increase in chronic disease patients, and the convergence of ICT technology, we will focus on 10 core tasks in three major areas: market creation, device development, and institutional foundation expansion."

This content was produced with the assistance of AI translation services.