Gov't to cut taxes, ax red tape to bolster growth in 2009

SEOUL, Dec. 18 (Yonhap) -- The South Korean government said Thursday that it will take steps to cut taxes and slash administrative red tape in the new year to fuel consumption and business activities to cope with the worldwide economic slump.

The Ministry of Strategy and Finance said in a policy report made to President
Lee Myung-bak that concerted effort will be made to help create new jobs, fuel
business investment and strengthen assistance to underprivileged people who may
be hard hit by the slowdown in growth.
Seoul said earlier in the week that the economy will be hard pressed to reach 3
percent growth in 2009 from 5 percent in 2007, with about 100,000 new jobs likely
to be being created from 200,000-300,000 target set at the start of the new
administration.
It also said that while the current account will move firmly in the black,
exports may fall off compared to this year, hurting industrial production.
The ministry said to fuel consumption and help the auto industry, it will cut
excise tax on autos by 30 percent from Friday to June of next year.
Concerns about the economy have caused people to tighten purse strings, with
spending on durable goods including cars falling off sharply in recent months.
It also said that companies will not be required to hold onto receipts for
business entertainment-related expenses as of next month, with the government
taking steps to sell off unnecessary state owned property that can create funds
to assist small- and medium- sized enterprises (SMEs) and underprivileged people.
The selling of state property could generate 3-4 trillion won the ministry said.
The ministry in charge of the country's economic policy said that size of loans
that can be made available to SMEs and exporters will reach 25 trillion won in
the new year or an increase of 4 trillion won from 2008.
To create more funds to help businesses, Seoul plans to enhance efficiency by
skimming 17.5 trillion won in expenses from the public sector that has received
flak for waste.
The government announced earlier in the year that there will be a large-scale
restructuring of state-run companies and organizations with a 10 percent
reduction in workforce.
Besides these areas the finance ministry said every effort will be made to front
load next years fiscal spending in the first half, allocate more funds to ease
the liquidity crunch and take steps to remove uncertainties in the foreign
exchange market.
In addition, Seoul will take steps to increase international cooperation, fuel
external trade by pushing for more free trade pacts and help local companies
expand into foreign markets.
yonngong@yna.co.kr
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