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This is because it is difficult for economic recovery and quarantine to coexist with more than 1,000 confirmed cases per day. Consumption revitalization measures are mainly based on quarantine stabilization and it is not clear whether they are implemented. If the Corona 19 spread continues, there are concerns that next year’s economy will fall below the level expected by the government, let alone the boost in consumption.
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Credit card additional income deduction + 30% tax reduction
The government announced on the 17th that it plans to promote tax benefits such as additional income deductions such as credit cards and individual consumption tax cuts to boost the national economy through the direction of economic policy for 2021 announced on the 17th.
Credit cards (15%), cash receipts and debit cards (30%) and traditional markets (40%) apply additional income deductions for the increase in the amount used next year. If the amount used for next year is more than 5% of this year, an additional 10% is deducted from the income up to a limit of 1 million won.
For example, if Mr. A, who has a total salary of 70 million won, spent 20 million won on a credit card this year and paid 24 million won next year, the deduction item will increase by 300,000. won (10% of the 3 million won in excess of 5%) of 975,000 won. . The reduction of the tax burden will increase by 45,000 won from the existing 90,000 won to 135,000 won. If you spend 4 million won more on the card than this year, it means that you can get 45,000 won back.
The excise tax on individual cars will be temporarily reduced by 30% from 5% in the first half of next year to 3%. The government reduced the car opening tax by 70% (5 → 1.5%) in February and June this year, which has had the effect of increasing new car sales. In order to revitalize the consumption of durable goods such as automobiles next year, tax benefits will be provided. However, the cut-off limit was limited to a maximum of 1 million won due to the profit problem for imported high-priced cars.
The return of the high-efficiency appliances purchased this year will also be implemented again in March-December next year. This time, a 20% refund will apply only to those who are eligible for the designated welfare discount on the electricity bill, not to all citizens.
In order to revitalize local consumption, Onnuri’s local love gift certificates and gift certificates will be issued for KRW 15 billion and KRW 3 billion, respectively, to increase by 6 billion won and 500 billion won. If public officials agree, it will also promote early payment of the annual compensation fee, which was initially paid in cash in July, with Onnuri gift certificates starting in April.
The budget for 4 + 4 vouchers and coupons for the purchase of agri-food products and the use of cultural facilities was also about 500 billion won. The voucher consisted of △ Support for the purchase of agricultural products △ Integrated cultural use rights △ Sports conference rights △ Support for working vacationers △ Agricultural products and coupons △ Dining out △ Accommodation △ Sports.
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Consumption stimulus plan under the premise of ‘quarantine stabilization’ … Implemented or not
Additional income deductions, such as credit cards and tax benefits, such as a lower opening tax, are expected to help boost consumption, but the implementation of in-person service-oriented businesses, such as Local Love gift certificates / Onnuri and 4 + 4 vouchers and coupons, is uncertain.
In the case of consumer coupons, they were included in this year’s supplementary budget (additional budget) and started from the second half of the year, but their use stopped when Corona 19 started to rise. Even now, dining out and sightseeing coupons have been temporarily suspended due to last month’s third markup. The government also announced that it will discuss and judge the resumption and suspension of the consumer coupon business with the Defense Countermeasures Headquarters. Depending on the situation of Corona 19, business uncertainty is great.
There are many other economic recovery projects included in the direction of economic policy on this day with the premise of stabilizing the quarantine. Large-scale national promotion events, such as the Korea Companion Sale and the Korea Sale Party, cannot be held depending on the quarantine situation.
Stabilization of quarantine is also a requirement for nationals and foreigners flying in overseas airspace or passing through Korea to use duty-free shops.
Korea’s Total Tourism Package (tourism support, transportation and accommodation for foreigners), which was promoted with the purpose of revitalizing domestic tourism, is still stagnant. It is said that the infrastructure of five tourism-based cities such as Busan, Gangneung and Jeonju will be expanded and a new smart tourism city will be selected, but the implementation of the project is difficult as the atmosphere of reluctance to move between cities spread due to the spread of Corona 19.
As this year, the government is in a position to respond appropriately by coordinating the quarantine and the economy. Hong Nam-ki, Deputy Prime Minister for the Economy and Minister for Strategy and Finance, said: “If you set the preliminary standards for the stimulus to consumption, there is a possibility that it will be too rigid and will have no quarantine effect, but only economic damage. It is desirable.”
Experts noted that more attention needs to be paid to strengthening victim support than to consumption measures that cannot be used due to quarantine.
Professor Seong Tae-yoon from the Yonsei University Department of Economics said: “As there may be holes in the quarantine in the third Corona 19 epidemic, measures to stimulate consumption may not have a great effect. He suggested that we should consider how to apply directly by selecting and thicker. “
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