Gov’t offers tax breaks to trade in diesel cars

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Gov’t offers tax breaks to trade in diesel cars

The government will give tax breaks for owners of old diesel vehicles who buy cars that run on gasoline starting today.

The Ministry of Strategy and Finance said Monday it will offer 70 percent, or up to 1 million won ($852), off individual consumption taxes for customers who replace their diesel vehicles registered before December 2006. The discount runs through June.

Auto buyers need to pay education and value-added taxes when they purchase the vehicles and the government will give them a break on those mandatory taxes. The Finance Ministry said a customer can immediately save up to 1.43 million won in taxes.

“The government decided to carry out this initiative to solve environmental problems that are closely related to public health and to boost domestic consumption for the eco-friendly sector,” said Jang Chul-ho, a director at the Finance Ministry. “The National Assembly is currently reviewing a bill that will lower the acquisition tax for old diesel-car drivers who purchase new gasoline vehicles and we expect it will get passed very soon. We expect to give tax cuts on acquisition tax as early as the beginning of next year.”

Diesel cars have been criticized as one of the biggest contributors to the high emission of fine dust in Korea. According to the Ministry of Environment, old diesel cars account for 79 percent of fine dust emitted from all diesel vehicles. Trucks and vans are exempt from individual taxes and the government will give 50 percent, or up to 1 million won, off acquisition taxes from Jan. 1 to June. 30.

The government also has expanded financial support to owners of diesel cars who voluntarily scrap their vehicles through the supplementary budget that went into effect in September.

The Finance Ministry said the initiative will be as effective as it was in 2009, when the government implemented similar measures to reduce the number of diesel vehicles. In 2009, the government gave 70 percent off individual and acquisition taxes for buyers who switched to cars that run on gasoline. Back then, 9.4 percent of old diesel passenger vehicles, 2.2 percent of vans and 2 percent of trucks were replaced.

Meanwhile, automakers in Korea also are offering financial incentives to diesel-car owners that buy new vehicles.

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