ID :
52438
Thu, 03/26/2009 - 22:20
Auther :
Shortlink :
https://www.oananews.org//node/52438
The shortlink copeid
Gov't to slash auto related taxes to fuel domestic sales
(ATTN: ADDS with more details from para 4)
SEOUL, March 26 (Yonhap) -- The government said Thursday that it will slash
automobile-related taxes to spur domestic consumption and help carmakers better
cope with the worldwide economic slump.
The temporary measures that go into effect on May 1 and will last through the end
of the year call for consumption, registration and acquisition taxes for newly
purchased vehicles to be cut by 70 percent, the Ministry of Knowledge Economy
said. The maximum amount in individual tax reductions to be given has been set at
2.5 million won (US$1,860).
The incentives, ironed out at an emergency economic policy meeting earlier in the
day, will only apply to owners who registered their vehicles before Jan. 1, 2000
and are looking to buy new cars.
"The total number of cars that the temporary benefits apply to is estimated at
around 5.5 million, but if just 5 percent of the older model car owners buy new
vehicles, it translates into sales of 250,000-260,000 units," said Knowledge
Economy Minister Lee Youn-ho.
On average about 80,000 cars are sold in the country per month, so the new
measures could push up sales by over 35,000 units per month from May through
December. The benefits will cover both privately owned cars and those operated by
businesses.
"The changes could also help improve the country's carbon dioxide emissions by 2
percent," the official said. He pointed out that before 2000, the country did not
enforce tough emission standards, which have now become important as the country
moves to reduce greenhouse gas output.
The policymaker, however, stressed that since the government planned to use
taxpayers money to help the beleaguered car manufacturing sector, it will ask
companies to improve efficiency and labor-management relations.
"If carmakers are slow to change, the proposed support may be of limited scope or
withheld depending on circumstances," Lee said.
The ministry in charge of the country's industrial policies also said efforts
would be made to provide more liquidity to financial companies vital for
increasing sales.
The government could buy up corporate bonds issued by auto financing companies to
allow more liquidity to reach such firms.
On R&D support, the government will offer funds for the development of technology
that can help improve vehicle fuel efficiency by 5 percent annually in the coming
years that can lead to a 10 percent increase in production and exports.
Financial support will also be given to the development of eco-friendly vehicles
including so-called plug-in hybrid cars and related components.
Other policies that are to be carried out call for pooling 1 trillion won in
mergers and acquisition funds by state-run Korea Development Bank and other
investors to facilitate industry-wide restructuring efforts. The money could be
used to take over or buy stakes in foreign parts suppliers.
"The measures outlined do not conflict with existing international rules
regarding support of industries and companies by the government, and are actually
mild compared to policies being pushed forward in Europe and the United States,"
a ministry spokesperson claimed. He stressed that people and companies purchasing
foreign-made cars can benefit from this arrangement.
Without going into details, the official said if companies take steps to enhance
competitiveness and work out labor-management conflicts in a peaceful manner,
Seoul may consider offering subsidies to help car owners scrap old vehicles and
slash environmental protection charges on diesel-engine vehicles.
South Korea's auto industry, meanwhile, reported a 34.1 percent on-year drop in
production in the first two months of this year as both exports and domestic
consumption were hit by sagging demand.
Such developments could pose problems for the overall economy since the sector
employs roughly 1.6 million workers directly and indirectly.
In 2008, the country produced 3.83 million vehicles, or 6 percent of the global
total, with 70 percent of these being sold abroad. Exports reached $US48.9
billion, with the country posting a surplus of $41.3 billion in the auto sector
for the entire year.
yonngong@yna.co.kr
(END)
SEOUL, March 26 (Yonhap) -- The government said Thursday that it will slash
automobile-related taxes to spur domestic consumption and help carmakers better
cope with the worldwide economic slump.
The temporary measures that go into effect on May 1 and will last through the end
of the year call for consumption, registration and acquisition taxes for newly
purchased vehicles to be cut by 70 percent, the Ministry of Knowledge Economy
said. The maximum amount in individual tax reductions to be given has been set at
2.5 million won (US$1,860).
The incentives, ironed out at an emergency economic policy meeting earlier in the
day, will only apply to owners who registered their vehicles before Jan. 1, 2000
and are looking to buy new cars.
"The total number of cars that the temporary benefits apply to is estimated at
around 5.5 million, but if just 5 percent of the older model car owners buy new
vehicles, it translates into sales of 250,000-260,000 units," said Knowledge
Economy Minister Lee Youn-ho.
On average about 80,000 cars are sold in the country per month, so the new
measures could push up sales by over 35,000 units per month from May through
December. The benefits will cover both privately owned cars and those operated by
businesses.
"The changes could also help improve the country's carbon dioxide emissions by 2
percent," the official said. He pointed out that before 2000, the country did not
enforce tough emission standards, which have now become important as the country
moves to reduce greenhouse gas output.
The policymaker, however, stressed that since the government planned to use
taxpayers money to help the beleaguered car manufacturing sector, it will ask
companies to improve efficiency and labor-management relations.
"If carmakers are slow to change, the proposed support may be of limited scope or
withheld depending on circumstances," Lee said.
The ministry in charge of the country's industrial policies also said efforts
would be made to provide more liquidity to financial companies vital for
increasing sales.
The government could buy up corporate bonds issued by auto financing companies to
allow more liquidity to reach such firms.
On R&D support, the government will offer funds for the development of technology
that can help improve vehicle fuel efficiency by 5 percent annually in the coming
years that can lead to a 10 percent increase in production and exports.
Financial support will also be given to the development of eco-friendly vehicles
including so-called plug-in hybrid cars and related components.
Other policies that are to be carried out call for pooling 1 trillion won in
mergers and acquisition funds by state-run Korea Development Bank and other
investors to facilitate industry-wide restructuring efforts. The money could be
used to take over or buy stakes in foreign parts suppliers.
"The measures outlined do not conflict with existing international rules
regarding support of industries and companies by the government, and are actually
mild compared to policies being pushed forward in Europe and the United States,"
a ministry spokesperson claimed. He stressed that people and companies purchasing
foreign-made cars can benefit from this arrangement.
Without going into details, the official said if companies take steps to enhance
competitiveness and work out labor-management conflicts in a peaceful manner,
Seoul may consider offering subsidies to help car owners scrap old vehicles and
slash environmental protection charges on diesel-engine vehicles.
South Korea's auto industry, meanwhile, reported a 34.1 percent on-year drop in
production in the first two months of this year as both exports and domestic
consumption were hit by sagging demand.
Such developments could pose problems for the overall economy since the sector
employs roughly 1.6 million workers directly and indirectly.
In 2008, the country produced 3.83 million vehicles, or 6 percent of the global
total, with 70 percent of these being sold abroad. Exports reached $US48.9
billion, with the country posting a surplus of $41.3 billion in the auto sector
for the entire year.
yonngong@yna.co.kr
(END)
