Gov’t Mulls “Energy Voucher”

The government is pressing ahead with a policy that grants energy vouchers worth less than 100,000 won on a monthly basis to the self-employed and those who run transportation businesses. Also, the revision of law, which exempts value added taxes on the necessities of life, including instant noodles and cooking oil, and children’s goods for two years will be presented to the special session of the National Assembly this month.

A government official participating in developing countermeasures against the oil price hike said yesterday, “We expect financial burden on the self-employed to be reduced greatly with the maximum 100,000 won of monthly oil grants. This system will be introduced after July after revising relevant laws and enforcement ordinances.”

Also, the government decided to extend the period of paying the 287-won grant per liter of diesel for large cargo trucks by two years. Originally, the grant was to end late June. The government is also considering ways to increase the amount of grant money.

However, cuts in oil prices are postponed, in consideration that the government already cut oil taxes by 10 percent in March and that the effect of tax cuts is not very significant when international oil prices are soaring day by day.

Meanwhile, Grand National Party lawmaker Lee Hahn-koo said on inflation measures that he is planning to propose a tax law revision to exempt value added taxes on the necessities of life by next year. However, only limited numbers of items will be listed on the enforcement ordinance of taxation exception act, since eliminating value added taxes on the entire 52 necessities of life that the Lee Myung-bak administration eyes to control inflation could shake the basis of tax revenue. Exemption on value added taxes on instant noodles, cooking oil and children’s goods could reduce 135.8 billion won of tax burden for this year and next year.

Moreover, the administration is planning to revise the current income tax system, which offers 3 million won of income deduction per child to workers with children younger than six years old, to 600,000 won of tax deductibles per child. This way, low-income workers whose credit card spending is not large enough can enjoy tax deduction benefits as well.

legman@donga.com