S. Korea to extend consumption tax cut on cars for 6 more months

SEOUL, Dec. 24 (Yonhap) -- South Korea will extend its consumption tax cut on passenger cars for an additional six months through the end of June next year, the finance ministry said Wednesday.

Under the latest extension, the individual consumption tax on passenger vehicles will be lowered to 3.5 percent from the original 5 percent, according to the Ministry of Economy and Finance.

The ministry said the measure will be terminated after June 30, 2026, taking into account recent signs of recovery in domestic demand.

The government first introduced the tax cut in July 2018 and has since repeatedly extended it to help boost domestic consumption, particularly during the COVID-19 pandemic.

Separately, the government will also extend its fuel tax cuts for an additional two months through the end of February to ease the burden on consumers amid continued volatility in global oil prices.

Under the latest extension, the current tax reductions -- 7 percent on gasoline and 10 percent on diesel and liquefied petroleum gas (LPG) -- will remain in place until Feb. 28.

The latest decision took into account the uncertainty in domestic and international oil prices, as well as consumer prices, and aims to alleviate fuel cost pressures on the public, according to the ministry.

South Korea first introduced the fuel tax cut in November 2021 as a response to rising energy prices. The government has since extended the measure, adjusting the rates in accordance with changes in the global energy market.

This latest move marks the 19th extension of the fuel tax relief program.

South Korea, which depends heavily on imports for energy, is particularly vulnerable to external price shocks, which often lead to domestic inflation.

khj@yna.co.kr
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