Tax on domestic cars to be lowered in July
gettyimagesbankBy Yoon Ja-youngConsumption tax levied on domestic passenger cars will be lowered from July, which will in turn pull down consumer prices. It follows an overhaul in taxation which has been disincentivizing the purchase of domestic cars in favor of imported cars.Currently, consumption tax is applied to prices including distribution cost and margin in the case of domestic cars, as tax is levied when the cars leave the factory to be purchased by consumers. As imported cars have tax applied at the time of import clearance, distribution cost and margin, which come after the import clearance procedure, are not included when applying tax. It thus triggered a controversy that people who wish to purchase domestic cars are facing “reverse discrimination” in terms of taxation. According to Korea Economic Research Institute, a domestic car sold at 60 million won ($46,000), for instance, is levied 3.67 million won in tax, while an imported car of the same price faces 2.65 million won in tax. To make up for the difference, the National Tax Service (NTS) decided to change
