Benz, BMW and others may face legal action

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Benz, BMW and others may face legal action

Consumers are considering taking legal action against the foreign automakers refusing to refund the individual consumption tax to their customers.

According to the law firm Barun on Monday, it is gathering people who purchased cars from Mercedes-Benz, BMW, Volkswagen, Volvo and Infiniti in January to file a lawsuit against the automakers.

Earlier this month, the Ministry of Strategy and Finance announced it would lower the individual consumption tax on cars once again to boost the economy. The move came after automakers saw their sales drop significantly in January following the end of the temporary tax reduction in December. The ministry said it would lower the tax on cars from 5 percent to 3.5 percent starting Feb. 2 and maintain the policy through June. But the five automakers declared they wouldn’t follow the government’s policy, claiming the promotions they offered in January could be seen as their voluntary extension of the tax reduction.

In this issue, there are two types of cars: the cars sold in January after clearing customs in December, and cars sold in January after clearing customs that same month. The cars in question are those that cleared customs in December, which customers say are still subject to the tax cut.

“It doesn’t matter how the tax was applied when they sold the cars to customers; it’s all about what they said to those customers,” Ha Jong-sun, an attorney at Barun, told the Korea JoongAng Daily. “For cars that passed customs in December, the 1.5 percent tax reduction was a benefit customers were automatically entitled to. But if automakers claimed it was their own promotion, it clearly is unlawful advertising that the Fair Trade Commission [FTC] must investigate.”

More than 10,000 cars were sold last month after passing through customs in December, according to Barun.

Ha said he will wait to see how the FTC reacts before taking legal action but also said that a class-action lawsuit will be filed if the government doesn’t do its job.

The Ministry of Strategy and Finance said earlier this month that it is not considering getting involved in the issue, even though it is the agency that decided to extend the tax reduction policy until the first half.

“The government also needs to investigate whether the foreign automakers [that decided to follow the government’s tax cut decision] refunded the tax to their customers who purchased a car last month,” Ha said.

Barun is the law firm that is also currently managing the lawsuit against Volkswagen for cheating during emissions testing.

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