[2021 Economic Policy] Up to 1 Million Won Income Deduction Benefit for Increased Credit Card Spending

Government's '2021 Economic Policy Direction'
Incentives Provided Including Consumption Rebound Tax Benefits
Spreading Consumption Mood Through Daehanminguk Donghaeng Sale and Korea Sale Festa
Expansion of Transportation and Accommodation Infrastructure in 5 Key Tourist Hub Cities
Support for Tourism and Accommodation for Foreigners Arriving at Regional Airports

[Asia Economy Reporter Jang Sehee] The government will hold events such as the Korea Together Sale and Korea Sale Festa next year to stimulate national consumption. Additionally, if credit card usage increases by a certain level compared to the previous year during next year, a separate additional income deduction will be provided for the increased amount. The Ministry of Economy and Finance announced these domestic demand stimulation measures on the 17th through the "2021 Economic Policy Direction."

◆ Separate Income Deduction for Credit Card Usage Increase Compared to Previous Year = The government will establish a new additional income deduction for the increased amount if credit card usage increases by a certain level compared to the previous year during next year. The deduction limit is set at 1 million KRW. For example, if card usage increases by more than 5% compared to this year, an additional 10% deduction will be given on top of the current 15-40% card deduction. The government plans to set the increase criteria after the final consumption statistics for this year are released. However, the probability of it being over 5% is high. Since annual credit card usage is expected to increase by more than 5%, adding the consumption decrease caused by COVID-19, the threshold is likely to be set higher than 5%. Also, the individual consumption tax imposed on passenger car purchases will be reduced by 30% (tax rate from 5% to 3.5%) from January to June. Partial refunds will be supported for purchases of high-efficiency home appliances.

◆ Staggered Holding of Consumption Events Based on Quarantine Stability = The government plans to promote various consumption events based on quarantine stability. During the first half of this year, the Korea Together Sale will be promoted, involving large and small retailers and traditional market small business owners. Additionally, Busan, Gangneung, Jeonju, Mokpo, and Andong will be differentiated as tourism hub cities with expanded transportation and accommodation infrastructure. The government also plans to designate three new smart tourism cities next year. Support will be provided for AI-based itinerary planning, mobile easy reservation and payment, and free Wi-Fi.

◆ Infrastructure Expansion for Five Tourism Hubs = The Korea Total Tourism Package will be introduced to provide customized support for tourism, transportation, and accommodation for foreign visitors arriving at regional airports. The government plans to select two local governments among Busan, Daegu, Chungbuk, Jeonnam, and Gangwon through a future public contest. Transportation hub tourist information centers will be operated, and leisure sports tourism will be promoted. Furthermore, the investment amount for the startup early-stage small tourism company development fund will be expanded to 45 billion KRW. In addition, a "Post-COVID-19 Strategy for Revitalizing Inbound Tourism" will be prepared to boost overseas tourist attraction.

◆ Expansion of Local Love and Onnuri Gift Certificates to 18 Trillion KRW = To create conditions for consumption recovery, local love gift certificates and Onnuri gift certificates worth 18 trillion KRW will be issued. To activate local consumption and support small business owners, the use of local love gift certificates online via delivery apps will be encouraged. Some of the annual leave compensation for public officials next year will be paid early in the form of online gift certificates with their consent. Regarding this, the government explained, "The system introduction is possible only when individual public officials agree."

This content was produced with the assistance of AI translation services.