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South Korea announced that it would be lifting tariffs on food imports to improve the standard of living in the country. On Monday, May 30, the local government revealed a special package to help fulfill the aim of making the living conditions of households better.
The package has been designed to ease household burdens for living expenses as many are already suffering from the increasing consumer prices. With the Finance Ministry’s KRW3 trillion budget plan to sustain livelihoods, the government will be slashing households’ expenditure burden for housing and commodities.
According to The Korea Herald, the government will implement a number of countermeasures, and the costs for this move are likely to reach over KRW3 trillion or about $2.5 billion. The amount will come from state funds and will be used to combat the high inflation rate. This plan was confirmed by economy ministers during a meeting in Seoul led by Deputy Prime Minister and Finance Minister Choo Kyung Ho.
For the most part, the aim of the measure is to impose a zero tariff on food ingredients such as cooking oil, flour, processed eggs, pork, and wheat until the end of this year. As the government officials are set to remove the quota tariff on imported pork meat from the present 22.5 to 25% to zero percent, the country’s Ministry of Economy and Finance said this could also lead to the reduction of pork prices in the local markets by as much as 20%.
Moreover, they are also planning to suspend the quota tariff on flour and cooking oil which normally has three and five percent import taxes, respectively. The officials will implement the zero percent tariff on the said products in the coming days.
Tax cuts on processed eggs will be extended as it already has a temporary tax exemption. For coffee and cocoa beans, the value added tax will also be removed by 2023. The slash is expected to affect import prices and ultimately reduce them by nine percent. Overall, the officials believe these tax cuts will lower South Korea’s inflation rate by 0.1 percentage point per month.
Meanwhile, as posted on the International Trade Administration website, South Korea normally has a flat 10% value added tax (VAT) on all imports as well as locally produced goods. A special tariff of 10 to 20% is also imposed on the import of some luxury items and consumer merchandise.
