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History of Vehicle License Tax

The collection of license plate taxes in our country began in 1936. For purposes of revenue generation, some provinces, cities, and prefectures began to collect license fees or user fees for cars and ships which are similar to a vehicle license tax. Due to differences in local procedures, the standards for collecting such fees differed widely. In February 1947, all such collection procedures were standardized when the General Provisions for the Vehicle License Tax Collection Act was promulgated. Following several amendments, this Act was superseded by the Vehicle License Tax Act in May 1950. 

The Vehicle License Tax Act was amended nine times between 1955 and 1979. Initially, this tax was collected directly by city and prefecture governments. Gradually, via various amendments, the responsibility for levying and collecting vehicle license tax was transferred to the provincial level and was administered directly by cities. Very clear provisions now cover collection and registration procedures. Due to the rise in social standards and economic prosperity, the number of vehicles in use has greatly increased and this tax has become a major source of revenue for local governments.

In recent years, in order to encourage the use of less-polluting vehicles and to realize the vision of innovation for the industry with green-energy technology, the amendments to the Vehicle License Tax Act were promulgated so that municipal or county (city) governments were authorized to exempt completely electric-operated vehicles from the vehicle license tax in 2012, 2015, 2017, and 2021.