The Korea Herald reports that the excise tax reduction applying to new car purchases has been extended to the end of August. The temporary tax reduction scheme was introduced last year to boost domestic demand, and was originally set to end next month.

Under the scheme, the government lowered the excise tax on automobiles with an engine capacity of over 2,000 cc to 10% from 14%. The excise tax on cars with an engine capacity of 1,500 cc to 2,000 cc was reduced to 7.5% from 10%. For cars with less than 1,500 cc engines the reduction is to 5% percent from 7%.

"Though the economy is apparently on a recovery path, it takes some time to secure a full-blown recovery," said Park Byong-won, director general at the finance ministry's economic policy division told The Korea Herald.