Economic Policy Direction Announced for the 2nd Half

The government has decided to lower the special consumption tax imposed on kerosene and other types of oil and abolish the sales tax in order to relieve people and small business owners from the burden of oil costs. It also plans to lower the transfer tax imposed when an owner of a small or medium enterprise transfers his or her business beginning next year.

The government announced the direction for its economic administration for the second half of this year, which consists mainly of the aforementioned initiatives, during the Conference for Economic Assessment and Consultation on the National Economy hosted by Prime Minister Han Duck-soo on July 11 at the Bankers Club in Myeong-dong, Jung-gu, Seoul.

First, it will abolish the sales tax of 23 won per liter of kerosene, a fuel for heating, and lower the special consumption tax of 134 won per liter. The degree of the tax reduction remains to be decided.

Also, it will cut down the environmental burden for light oil trucks owned by businesses and raise the percentage of simple costs when calculating the income of small business runners in 250 categories of businesses in which the proportion of oil costs is high, such as logistics service businesses. When the percentage of simple costs is raised, the tax burden is reduced because the amount acknowledged as cost of income grows.

In addition a measure will be promoted to cut the acquisition and registration tax by about half for light commercial vehicles.

The government also decided to cut the transfer tax so that the inheritance of family businesses can be carried out smoothly. Details will be announced at the end of next month and will be enforced starting next year.

Another planned measure is to permit the contraction of bank deposits and the withdrawal and deposit of money at branches of insurance companies.

higgledy@donga.com