Moon Administration's 'COVID-19 Economic Stimulus Measures'... Consumer Coupons and Korea Together Sale Held

March to June Check and Credit Card Usage Amount 'Income Deduction Rate' Doubled

70% Reduction in Car Individual Consumption Tax

[Image source=Yonhap News]

[Asia Economy Reporters Kwangho Lee and Sehee Jang] The government is mobilizing all available policies, including a reduction in the individual consumption tax on passenger cars, issuance of consumption coupons, and holding the Korea Together Sale (tentative name), to revive the economy weakened by the novel coronavirus infection (COVID-19). Financial support for small business owners struggling with management difficulties will be expanded, and the burden of value-added tax will also be eased. Travel, tourism, and accommodation industries will be additionally designated as 'special employment support sectors.' The Daegu and Gyeongbuk regions, where COVID-19 is rapidly spreading, will be declared 'special disaster areas.'

On the 28th, the government held a COVID-19 response economic ministers' meeting and economic revitalization measures meeting chaired by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki at the Government Seoul Office, announcing the 'Comprehensive Livelihood and Economic Measures to Minimize the Impact of COVID-19 and Achieve Early Overcoming.'

To restore domestic demand, the government will temporarily reduce the individual consumption tax on all passenger car purchases by 70% from March to June. The reduction limit is 1 million KRW. The income deduction rate for expenditures using check and credit cards from March to June will also be doubled compared to the existing rate. In particular, to promote consumption in various fields such as jobs, vacations, culture, tourism, and childbirth, a '5 Major Consumption Coupons' system will be introduced.

The job coupon provides an additional incentive equivalent to 20% of the total compensation when elderly job participants receive 30% of their total compensation in gift certificates. Also, the 'Korean-style Check Vacation' support, where the government matches workers' vacation expenses for domestic tourism, will be expanded from 80,000 to 120,000 people. An integrated cultural usage voucher worth about 90,000 KRW will also be additionally supplied to low-income groups. Pregnant women will be provided with an electronic voucher to purchase eco-friendly agricultural products worth about 40,000 KRW per month. The government also plans to hold the 'Korea Together Sale,' a win-win concept event involving large and small distribution companies, traditional markets, and small business owners, in the first half of the year.

Special financial support, such as ultra-low-interest loans for small business owners, will be expanded from the current 1.2 trillion KRW to 3.2 trillion KRW. In addition, the value-added tax payment amount for small individual business owners with annual sales of 60 million KRW or less will be reduced to the simplified taxpayer level until the end of 2021.

The government will consider all possible support measures, including declaring the Daegu and Gyeongbuk regions as special disaster areas. Once declared a special disaster area, the Daegu and Gyeongbuk regions will receive special administrative, financial, tax, and financial support necessary for emergency measures and damage recovery related to COVID-19. Support will also be provided to stabilize the livelihoods of affected residents. In addition to basic support, the government plans to promote separate support using supplementary budgets. The designation of special employment support sectors for travel, tourism accommodation, and tourism transportation industries is also under review.