Korea Government Announces Radical Excise Tax Cuts

by Mary Swire, Tax-News.com, Hong Kong

20 November 2001

In a bid to increase consumption in Korea, the government has drawn up plans to radically reduce the excise tax on several products such as automobiles, air conditioners and golfing equipment by as much as 50 per cent. It is expected that the tax rate reduction will result in lower consumer prices which will, in turn, encourage more consumption and help speed up the economic recovery.

Under the government's plans the tax on cars is to be halved temporarily for one year. The government has announced that excise tax on cars with engine displacements of 2000cc or more will be reduced to 10 per cent, 1500-1999cc engine cars to 7.5 per cent, and on all cars with engines under 1500 cc will fall to five per cent.

The special consumption tax on items like air conditioners, golfing equipment, jewelry, furniture, fur products and watches will be lowered from the current 30 per cent to 20 per cent.

'Consumers would be able to buy the consumer goods at lower prices. The tax cut would also help golfers buy golfing gear at lower prices. Eventually, the excise tax cut would help boost the economic recovery,' said Rep. Kang Woon-tae, chief policymaker of the ruling party.

The opposition Grand National Party with a majority of seats in the unicameral legislature has said it would like to see excise taxes lowered across the board and has suggested that the excise taxes be cut by a uniform 30 per cent.

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