Carmakers cause Korea smog tax delay

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Seoul - South Korea has delayed a proposed tax on vehicle carbon emissions by over five years to the end of 2020, amid pressure from domestic and US carmakers who fear the levy would curb sales.

But the country confirmed it would push ahead with plans to begin what will be the world's second-biggest carbon emissions trading scheme from the start of 2015, as it battles to cut greenhouse gas emissions in 2020 to 30 percent below business-as-usual levels.

South Korea is one of the world's top 10 carbon producers, so any steps it takes to curb emissions are key to global efforts to combat greenhouse gases in the environment.

THE GREEN BURDEN

Finance minister Choi Kyung-hwan said in a meeting with other ministers on Tuesday that the so-called smog tax, which has already been postponed by more than two years, would place too much of a burden on industry if it was launched at the same time as the carbon trading scheme.

“The tax was expected to have strong side effects on domestic industries and consumers (at this time),” Choi told the meeting, citing a study by state-run research institutes.

The delay in the tax had been widely expected, with people familiar with the matter saying the levy could slash domestic sales by up to 10 percent at the country's largest car company, Hyundai.

Choi said the nation would press on with plans to expand subsidies on purchases of environmentally-friendly vehicles such as electric cars.

The government will also strengthen average vehicle emission and fuel efficiency standards to similar levels as Europe and Japan through 2020, he said.

“WE’LL MAKE CLEANER CARS, PROMISE”

Car makers welcomed the delay in the tax, while pledging to work hard to reduce greenhouse gas emissions from their industry.

“We will continue to strengthen the competitiveness of South Korea's automobile industry by developing eco-friendly vehicles such as electric and hybrid cars, and actively investing in improving the fuel efficiency of internal combustion engines,” said a spokesman for the Korea Automobile Manufacturers Association.

Reuters



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