Two-month reduction in electricity bills for 940,000 places affected by quarantine
6-month extension of the reduction in automobile sales tax
The government provides loans of up to 20 million won at a low interest rate of 1% per year to 100,000 small business owners who have not been compensated for their losses. The 30% cut in the individual consumption tax for passenger cars, which was scheduled to end at the end of the year, will be extended until June next year.
On the 23rd, the government held a meeting of the Central Emergency Economy Countermeasures Headquarters presided over by Hong Nam-ki, Deputy Prime Minister and Minister of Strategy and Finance, and announced plans to support the livelihood economy, including small businesses worth 12.7 trillion won. The financial resources will be raised using 19 trillion won in excess tax revenue this year and the existing budget. Deputy Prime Minister Hong said, “We will provide 9.4 trillion won to businesses that are not eligible for loss compensation, and 10.8 trillion won will be provided to small business owners by combining the previously announced 1.4 trillion won from the lack of compensation for losses in the third quarter.” said.
First of all, the government will provide a ‘special loan for daily life recovery’ to small business owners who are not eligible for loss compensation up to 20 million won at an interest rate of 1% per annum, which is the lowest in history. The amount of support is 2 trillion won. In the third quarter of this year (July to September), 100,000 companies, including weddings and funerals, exhibitions and expositions, and accommodation facilities, whose sales declined due to restrictions on the number of people or facilities, were targeted.
The government will lower the interest rate by up to 1 percentage point on the remaining loan balance (3.6 trillion won) of next year’s tourism loans that support the travel and lodging businesses. The amount of vouchers paid for cultural, sports, and training facilities will also be increased by 50 billion won to support sales of businesses not eligible for loss compensation. For the 940,000 businesses that have suffered business damage due to the novel coronavirus infection (COVID-19) quarantine measures, electricity bills will be reduced by 50% and industrial accident insurance premiums by 30% for two months in December of this year and January of next year. The limit of exemption per company is 200,000 won. 100 billion won is also spent on support tailored to each industry, such as supporting the hiring of 4,000 assistants in the performance industry. Support measures for the underprivileged were also included. The government will increase the finances for job search benefits by 1.3 trillion won and raise the unit price for energy vouchers for low-income families from 109,000 won to 118,000 won.
The government will use 5.3 trillion won of the 19 trillion won in excess tax revenue this year for this economic measure. 2.5 trillion won will be used to reduce the issuance of government bonds. This means that the issuance of government bonds scheduled for next month will be reduced by this amount. 40% of excess tax revenue (7.6 trillion won) goes down to local grants. The remaining amount is used for public funds and debt repayment, and the remaining amount is treated as next year’s revenue.
The government announced that it would extend the 30% cut in the individual consumption tax for passenger cars, which was scheduled to end at the end of this year, until June next year to stimulate domestic demand. The discount limit is 100,000 won. Deputy Prime Minister Hong said, “Even though the vehicle was purchased this year, the purchase cost will also be reduced for consumers whose vehicle is shipped out in the first half of next year.”
Sejong = Reporter Joo Ae-jin jaj@donga.com
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