S. Korean automakers call for tax cuts to fuel sales

SEOUL, Feb. 18 (Yonhap) -- South Korean automakers called for the lowering of car
acquisition and registration taxes to help revive sales that have been hard hit
by the current economic woes, the government said Wednesday.
The Ministry of Knowledge Economy said local carmakers complained that present
tax rates are too high and discouraged people from buying new vehicles.
At present, people who buy cars in the country must pay 2 percent of the purchase
price on acquisition tax with 5 percent taxes levied for registering the vehicle.
"Carmakers said such high rates should be lowered even if it is on a temporary
basis, and that this move is preferable to proposals to give state subsidies to
all car buyers, which is being pursued in other countries," a ministry official
said after the meeting.
Lowering tax rates would have the same effect as cutting prices or offering
subsidies since the total amount paid by consumers will go down.
In January, South Korea's five carmakers reported a 34.7 percent drop in sales
compared to the previous year as the worldwide economic slowdown sapped both
domestic and overseas demand for autos.
Hyundai Motor Co. and its affiliate Kia Motors Corp. reported 25.3 percent and
31.8 percent drops in sales for the cited month.
GM Daewoo Auto & Technology Co., Ssangyong Motor Co. and Renault Samsung Motors
Co. all posted double digit losses in sales on an annual basis.
Ssangyong, controlled by China's Shanghai Automotive Industry Corp. said sales
nosedived 82 percent on-year as the company applied for court receivership.
The ministry, meanwhile, said that calls to lower the automobile tax collected by
regional administration may not be easy.
This is because the tax is an important revenue source for many rural governments
that have weak tax bases.
yonngong@yna.co.kr
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