S. Korea rolls out $2.5bn economic stabilization package to curb inflation

[Photo by Park Hyung-ki]

South Korean government has unveiled 3.1 trillion won ($2.5 billion) worth of economic stabilization measures, ranging from temporary tariff exemption on pork and other select food imports to cut in real estate tax, to help ease the burden on households from rising inflation.

Under the measures, the government will remove import tariff on seven food items, including pork, wheat, and cooking oils, until the end of this year. The government plans to lift value-added tax on imported coffee and cacao beans, as well as on packaged processed food products, including Koreans¡¯ staple food items like kimchi and soybean paste until 2023.

The government estimates the related tax break to help slow inflation by 0.1 percentage point.

To ensure better housing stability, the government plans to ease the property possession tax burden for those owning a single home by imposing the same taxation base as in 2020, before housing prices began soaring. The limit on the loan-to-value ratio will be raised to 80 percent for those buying home for the first time from the third quarter, and 50-year mortgage loan is set to be introduced in August for newlyweds and youth.

Addressing the rising cost of living, the government decided to fix the interest rate on student loans at 1.7 percent, regardless of market rate rises.

The government is extending a 30 percent cut in the consumption tax on passenger car purchase by another six months until the end of this year, imposing only 3.5 percent rather than 5 percent.

The government will also encourage wireless carriers to introduce mid-range 5G data plans within the third quarter. Currently, local 5G plans are largely offered in two categories of 55,000 won per month for 10 to 12 gigabytes and 69,000 won to 75,000 won for 100 to 150 gigabytes.

Diesel subsidies will also be provided for the fishing industry for five months until October.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]