South Korea extends tax reductions for passenger cars
South Korea will extend tax reductions for automobile buyers by half a year in order to revive domestic consumption and economy, the Finance and Economic Ministry announced. Temporary reductions in the special consumption tax on passenger cars will be extended by another six months until June 2005. The reductions, which were announced in March, were due to expire at the end of 2004. South Korean economy has been negatively impacted by the weak domestic demand and consumers have also tightened their purse strings because of country's economic uncertainty. The Bank of Korea reduced the country's economic growth forecast to 4.7% for 2004 and 4% for 2005. Previously, 5.2% growth was projected for 2004 and 5% for 2005. Under the temporary tax reductions, medium-sized automobiles' tax rate is reduced from 10% to 8% while small cars' tax rate is decreased from 5% to 4%.