Consumer Preferences for Electric Vehicle Fuel Taxation: The Role of Revenue Recycling and Tax Salience in South Korea

Abstract

The rapid diffusion of electric vehicles (EVs) is weakening the conventional fuel tax base, creating new challenges for transport-energy taxation. Although South Korea does not currently tax EV charging electricity, such taxation is becoming increasingly relevant as EV adoption expands. This study examines consumer preferences for EV fuel-tax design by focusing on revenue recycling and tax salience, operationalized as the visibility of tax information on EV charging receipts. Using stated-preference data from a discrete choice experiment with South Korean adults aged 20–59, we estimate a mixed-mixed multinomial logit model capturing both discrete preference segments and continuous within-segment heterogeneity. A post-estimation multinomial logit analysis of individual-level salience coefficients identifies characteristics associated with relatively strong positive or negative preferences for tax salience. The results reveal two distinct segments. The majority shows positive preferences for tax salience and the revenue-use outcomes, whereas the minority is highly cost-sensitive and favors direct EV performance improvements. Stronger preferences for tax salience are associated with greater knowledge of the tax system, while negative preferences are associated with lower education and not currently driving. The results therefore represent conditional preferences among alternative EV fuel-tax designs, rather than acceptance of an EV fuel tax relative to no tax. The study provides policy-relevant insights into consumer preferences for EV fuel-tax design during the electric mobility transition.