The Korea Herald reports that Ssangyong Motor Co.’s Musso pickup truck will be classified as a passenger car and therefore subject to heavier taxation from next year, according to the government.
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Under the new rule, which takes effect in January, vehicles with less than 2 square meters of bed (freight area) will be classified as passenger cars.
Consequently, the taxes for a new Ssangyong Musso pickup with a 1.67-square-meter bed will rise by up to 3 million won, while a similar Dodge Dakota pickup with a slightly larger bed continues to enjoy the tax benefits of a freight vehicle.
“The discrepancy victimises Ssangyong and its consumers as they have to pay an additional 10 percent of the car price as special consumption tax plus 30 percent of the special consumption tax as education tax. Then there is the registration tax, of which the rate is scheduled to rise in January from 3 percent to 5 percent of the retail price,” said a Ssangyong official reported the Herald.
For instance, the price of the premium Musso SUT FX5 will increase from 20.6 million won to 23.28 million won next year largely due to the special consumption tax levied on passenger cars.
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By GlobalDataBuyers of the Musso SUT FX5 also need to pay an additional registration tax of about 500,000 won because the registration tax is equal to five percent of the purchase price.
The new classification can be a severe blow to current owners of the five-passenger Musso SUT as well, the report said. The fact that only 28,500 won of annual vehicle tax is levied on ‘freight vehicles’ motivated many of the 68,000 customers to buy the Musso pickup. However, they will have to pay about nine times the current amount for vehicle tax in 2010, according to the government.
“It is too bad the SUT I bought last year turns into a passenger car from next year, but I guess there is no way to stop the law. What we are asking the government to do now is to exempt those who already bought the vehicle from the increased vehicle tax,” said an owner of the SUT.
The controversy over classification of the pickup has a long history, the Korea Herald said.
When the nation’s first SUT dubbed ‘Musso Sports’ made its debut in September 2002, it was classified as a freight vehicle, which is exempt from the special consumption tax.
However, ten days after its launch, the National Tax Service announced that a special consumption tax would be imposed on the truck version of Ssangyong’s bestseller Musso sport-utility vehicle.
Despite strong backlash from the consumers and Ssangyong, the Ministry of Finance and Economy approved the deal and informed the new taxation policy to DaimlerChrysler which was planning to sell the Dodge Dakota here.
Then the U.S. began pressuring the Korean government, claiming that the special consumption tax should not be levied on the Dakota as it is a pickup truck sold worldwide, the Herald said.
Consequently, the Korean government exempted both the Dakota and the Musso Sports from the special consumption tax in November 2002.
Then those who paid the special consumption tax worth about 3 million won when they bought the Musso Sports during the two months demanded a tax refund.
The Korean government refused this, so Ssangyong Motor gave the refund while filing a lawsuit against the National Tax Service, the Herald report added.
