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Energy Inefficient Home Appliances to Face Extra Tax

Posted August. 13, 2009 23:06,   


Refrigerators, air conditioners, TVs and drum washers that are not energy efficient will face higher taxes from April next year.

The Strategy and Finance Ministry said yesterday that an individual consumption tax of five percent will be imposed on home appliances that fail to meet energy efficiency standards. Combined with an education tax of 1.5 percent, which accounts for 30 percent of the consumption tax, such products will face an additional tax of 7.15 percent.

If consumer electronics manufacturers raise prices because of the tax, a dual-door refrigerator priced at two million won will also include an additional 143,000 won in tax.

The ministry had initially mulled an additional tax of between five and 10 percent, but chose the lower figure given the potentially negative impact on domestic consumption and opposition from consumer electronics manufacturers, according to experts.

To allow companies time to make their products more energy efficient, the tax will probably take effect from April 1 next year.

Given vehement opposition from manufacturers, however, whether the tax will be imposed as planned is unclear.

A source at an electronics company said, “I don’t understand why the government is seeking an additional tax because it will definitely weaken domestic consumption.”

Experts also cited the issue of fairness in light of cuts to the individual consumption tax for cars, saying the tax on appliances will seem like a luxury tax because the basis of consumption taxes was shifted from efficiency to the energy consumed.

The ministry said, “Details on items subject to the tax, rates and the implementation schedule have yet to be made.”