ID :
46359
Thu, 02/19/2009 - 10:15
Auther :
Shortlink :
https://www.oananews.org//node/46359
The shortlink copeid
S. Korean automakers call for tax cuts to fuel sales
By Lee Joon-seung
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 the
present tax rates are too high and discourage people from buying new vehicles.
At present, people who buy cars in the country must pay 2 percent of the purchase
price as acquisition tax, with a 5 percent tax levied for registering the
vehicle.
"Carmakers claim such high rates should be lowered even if it is on a temporary
basis, which is natural in the face of weak domestic sales and a sharp drop in
exports," Cho Seok, head of the ministry's industrial growth office, said after
the meeting.
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. Companies, in addition, warned that
global demand for autos will contract 10-15 percent overall this year vis-a-vis
2008, with the large U.S. and European markets to post losses of 15-20 percent.
He, however, stressed that Seoul has not made up its mind on the issue since
there is a need to build public consensus.
"Some consumers will welcome the chance to buy cheaper cars, while others may
raise questions about giving preferential benefits to carmakers when the entire
industrial sector is suffering," the deputy minister said.
Lowering tax rates would have the same effect as cutting prices or offering
subsidies since the total amount paid by consumers will go down, but it could
pose problems in terms of state revenue.
Cho also said that while Washington is mulling support for the so-called big
three U.S. carmakers, local companies like Hyundai Motor Co. and Kia Motors Corp.
are not experiencing similar difficulties.
Hyundai and its affiliate Kia reported 25.3 percent and 31.8 percent drops in
sales for the first month of this year, although it is clear they are not in any
serious danger.
The government has maintained it cannot help individual industries and companies.
For other companies, the official said recent media reports indicated that GM
Daewoo Auto & Technology Co. may not be affected by the broader restructuring
program underway by U.S. automaker General Motors Corp, while Ssangyong Motor
Co., controlled by China's Shanghai Automotive Industry Corp., is undergoing a
court receivership program.
GM Daewoo reported sales drops of 50.5 percent in January compared to the year
before, with Ssangyong sales plunging 82 percent.
Sales of cars made by Renault Samsung Motors Co. fell by 9.2 percent on-year.
Other officials at the ministry, meanwhile, said that calls to lower the
automobile tax collected by regional administrations may not be easy because the
tax is an important revenue source for many rural governments that have weak tax
bases.
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 the
present tax rates are too high and discourage people from buying new vehicles.
At present, people who buy cars in the country must pay 2 percent of the purchase
price as acquisition tax, with a 5 percent tax levied for registering the
vehicle.
"Carmakers claim such high rates should be lowered even if it is on a temporary
basis, which is natural in the face of weak domestic sales and a sharp drop in
exports," Cho Seok, head of the ministry's industrial growth office, said after
the meeting.
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. Companies, in addition, warned that
global demand for autos will contract 10-15 percent overall this year vis-a-vis
2008, with the large U.S. and European markets to post losses of 15-20 percent.
He, however, stressed that Seoul has not made up its mind on the issue since
there is a need to build public consensus.
"Some consumers will welcome the chance to buy cheaper cars, while others may
raise questions about giving preferential benefits to carmakers when the entire
industrial sector is suffering," the deputy minister said.
Lowering tax rates would have the same effect as cutting prices or offering
subsidies since the total amount paid by consumers will go down, but it could
pose problems in terms of state revenue.
Cho also said that while Washington is mulling support for the so-called big
three U.S. carmakers, local companies like Hyundai Motor Co. and Kia Motors Corp.
are not experiencing similar difficulties.
Hyundai and its affiliate Kia reported 25.3 percent and 31.8 percent drops in
sales for the first month of this year, although it is clear they are not in any
serious danger.
The government has maintained it cannot help individual industries and companies.
For other companies, the official said recent media reports indicated that GM
Daewoo Auto & Technology Co. may not be affected by the broader restructuring
program underway by U.S. automaker General Motors Corp, while Ssangyong Motor
Co., controlled by China's Shanghai Automotive Industry Corp., is undergoing a
court receivership program.
GM Daewoo reported sales drops of 50.5 percent in January compared to the year
before, with Ssangyong sales plunging 82 percent.
Sales of cars made by Renault Samsung Motors Co. fell by 9.2 percent on-year.
Other officials at the ministry, meanwhile, said that calls to lower the
automobile tax collected by regional administrations may not be easy because the
tax is an important revenue source for many rural governments that have weak tax
bases.
