Special Report Vol. 63 (2021)

Increase of Eco-friendly Vehicles and Future Financing of the Road Sector

Chapter I. Study Background and Purpose

Chapter II. Review of Changes in Future Conditions and Financial Resources for Road Investment

1. Changes in Conditions in the Aspect of Infrastructure and Traffic
2. Changes in Conditions in the Aspect of Financial Resources in the Road Sector

Chapter III. Estimation of Future Road Sector Investment Resources

1. Scenario Setting and Future Estimation
2. Estimation of Finances and Major Implications

Chapter IV. Overseas Trends and Perceptions of Transportation Investment Resources

1. Overseas Trends of Mileage-based Traffic Taxes and Major Issues
2. Survey of Public Perception on the Introduction of Mileage-based Traffic Tax

Chapter V. Policy Measures for Financing Road Investments

1. Basic Direction for the Introduction of Mileage-based Traffic Taxes
2. Policy Tasks of the Introduction of Mileage-based Traffic Taxes
3. Other Policy Tasks for Financing Road Investments

Chapter VI. Conclusion and Future Tasks

1. Conclusion and Summary
2. Limitations and Future Tasks

Summary

Until now, the government has been pushing for the continuous expansion of road facilities through the Special Accounts for Traffic Facilities, which is an objective tax, and traffic taxes have played a crucial role as a stable funding system. Although the sustainability of the system is important for such traffic taxes, system reform is recognized as crucial because tax revenue on the existing fossil fuel-based traffic is expected to decrease due to technological advances contributing to the improvement of fuel efficiency of the internal combustion engine and driving the spread of ecofriendly cars. Therefore, this study aimed to identify the impact of road investment funds in preparation for the various changes in future conditions and propose a plan to raise the funds for sustainable road construction and maintenance, considering the need for new road investment.

Regarding traffic taxes, which is defined as a temporary law, various issues related to system improvement, such as raising the issue of institutional equity of the taxation system, including equity among vehicles, and issues of distribution ratio between sectors are being pursued. The effects were estimated based on various scenarios in terms of the stable budgeting of continuous road sector investment and of identifying the issue of inter-vehicle equity among existing traffic taxes and their impact.

Based on various factors affecting future revenue and expenditure, the analysis of the impact of securing future road sector funds showed that it would be difficult to secure long-term funds. Under the current traffic tax-based financial system, a separate policy implementation is required to prepare funds from 21 years later, and depending on the level of policy implementation, the timing of the depletion of funds can be postponed up to 30 years.

In the future, a new funding system will be required for the stable and sustainable financing of the road sector, including the introduction of driving tax or traffic tax on eco-friendly cars. Accordingly, the purpose of this study was to set the traffic tax based on mileage as a new policy alternative and draw implications for the introduction of the system through a national awareness survey on the system. The survey results indicate that the overall approval rate for the introduction of the new traffic tax was high, but the approval rate of survey respondents who own eco-friendly cars (i.e., plug-in hybrids, electric vehicles, and hydrogen cars) was relatively low. Hence, it is believed that a phased introduction of the new system is needed rather than a radical implementation.

Therefore, the need for a more detailed system design was emphasized through the presentation of various mid- to longterm policy tasks to introduce mileage-based traffic taxes, and in the short term, the policy tasks for diversifying various investment resources to meet the demand of investment in the road sector. These policy tasks propose measures to promote private investment in the old road infrastructure and maintenance sectors, strengthen the principle of benefit and burden, restructure the allocation of financial resources, enhance the flexibility of the proportion of national and local taxes, and promote new comprehensive support projects under the Special Accounts for Balanced National Development.