Special Consumption Tax Lowered as of Today

The special consumption tax on automobiles and air conditioners will be lowered as of today. Also from this month, South Koreans will be relieved of some of their tax burden. For example, a worker, who earns somewhere between 5 million won (or approximately $4,000) to 15 million won a year, will get 5% more in tax deductions.

The Congressional Committee on Finance and Economy passed the bill yesterday, and all of Parliament also approved of the bill on the same day. Originally, the bill was to take effect on the cars that got out of the manufacturing line as of yesterday. But the final decision came out late, and, as a result, the new law becomes effective 0:00 a.m., July 12th.

The tax rate will be lowered from the current 14% to 10% for medium or luxury cars. If the displacement volume is lower than 2,000cc, then 5% applies across the board. In terms of money, 170,000-250,000 won will be saved for compact cars; 250,000-310,000 won for sedans; 950,000-1,130,000 won mid-sized cars; and 1.15 million to 2.56 million won for the luxury.

Previously, 20% tax was levied on air conditioners. As of today, it will be down to 16%. Tax on projection TV sets and PDP TV sets will be lowered from 20% to 8% and 0.8% respectively.

Income tax deductions will be widened to 5% for those who earn 5 million won to 15 million won a year each. The limit on deductions will be raised from 400,000 won to 450,000 - 500,000 won.

Meanwhile, the National Assembly agreed to an additional budget of 4.5 trillion won. It will hold session on July 15th and 16th to pass the bill.

Dong-Ki Sung esprit@donga.com