South Korean government announces plans to reform alcohol tax system

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New measures were announced today to revise South Korea's alcohol tax system … with the aim of stimulating private investment in the sector.
For consumers, the new tax system will lead to lower prices for canned beer and craft beer, but higher prices for some others.
Our Ko Roon-hee tells us more.
Since 1968, taxes on alcoholic beverages in Korea have been based on their prices.
This meant that companies producing expensive drinks paid more taxes, which forced them to cut costs in many areas such as research and development.
However, Korea's Ministry of Finance has unveiled new plans to reform the liquor tax system.
The new measures indicate that taxes on beer and makgeolli will be based on volume or alcohol content, rather than price.
The change will be limited to these two alcoholic beverages, for the moment, given its rapid impact on the alcoholic beverage industry.
Chief Financial Officer Hong Nam-ki explained how this change would help improve the country's economy.
"These changes to the tax system will revitalize the craft beer sector (…), which offers a relatively large potential for job creation." In addition, if beer production increases in Korea, employment will boost Upstream and downstream industries, investments in facilities will also increase. "
This announcement came after many brewing companies criticized the current system because of the inequitable differences in taxes between domestic and foreign brands.
The government plans to include the changes in this year's tax reform proposal … and submit them to the National Assembly in early September.
If it is approved, the change will likely come into force next year.
With the change, the beer tax will reach about 70 cents per liter, which means that consumers will be able to buy cheaper canned beer and craft beer from supermarkets or convenience stores.
An expert on the subject pointed out that the reform should also apply to other drinks.
"In general, the liquor tax is considered adequate to improve the corrective effect of external diseconomy External diseconomy refers to the social costs of alcohol consumption … such as Damage to health or driving while intoxicated.Alcohol content should also apply to other types of drinks, as in many other countries of the OECD. "
As part of another attempt to revitalize the economy …, the government also announced on Wednesday that it would extend a temporary tax reduction on pbadenger car purchases up to $ 20,000. 39 at the end of the year.
This initiative is expected to revitalize the country's auto industry.
Ko Roon-hee, Arirang News.

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