Special Excise Tax for Air Conditioner of Vehicle Will Be Cut down Next Month

The special excise tax imposed to the automobile air-conditioner and golf wares will be significantly lowered, anticipating the price-cuts of such products.

The government and the ruling party decided to revise the special excise tax law to promote the domestic consumption and to implement the new law as soon as the bill is approved by the National Assembly.

According to the revised bill, 50 percent of the basic tax rate will be reduced to the automobiles that will be produced by the end of December next year. The reduced rate will be applied to Jeeps and other vehicles for leisure except for Vans. Since a flexible tax is already applied to automobiles, the actual reduction of the tax will be about 28.5 percent.

Once the bill is passed, the tax rate of the full size cars over 2000 cc displacement will be lowered to 10 percent from current 14 percent, the intermediate cars over 1500 cc displacement from 10.5 percent to 7.5 percent, and economy or compact cars below 1500 cc from 7 percent to 5 percent.

And the special taxes to the life and leisure goods, such as air conditioners, golf ware, motorboats, yacht and water ski products, wind surfing goods, hang gliders, image appliances, jewelries, furniture, and furs, will be adjusted from current 30 percent to 20 percent. In addition, some products including projection TVs, high quality cameras (over 2 million won), deer antlers, royal jellies, aroma cosmetics, are excluded from the special tax imposition.

Kang Wun-Tae, the director of the second policy coordination committee of the New Millennium Democratic Party, explained ``this reduction of the special excise tax is to promote the economic recovery by reducing the tax burden of the middle class to help them to enjoy more leisure activities.``

Meanwhile, the Grand National Party is presenting a bill to reduce the special excise tax by 30 percent and the ruling and the opposition parties will discuss the bills at the finance and economy committee of the National Assembly. The two parties have agreed on a considerable part of the bill, expecting the approval of the bill during the session.

sanjuck@donga.com