(ATTN: ADDS tax support, details in last 5 paras)
By Kim Deok-hyun
SEJONG, Dec. 24 (Yonhap) -- South Korea's finance ministry said Tuesday that about 71 percent of next year's budget has been allocated for implementation during the first half of the year, as the government aims to boost recovery momentum for Asia's fourth-largest economy.
According to the ministry, 71.4 percent of state budget totaling 427.1 trillion won (US$366 billion), which covers welfare and other fiscal spending, will be front-loaded for use during the January-June period.
The nation's economy is expected to grow 2.4 percent next year, following this year's estimated 2-percent expansion, on the back of an anticipated recovery in the memory chip sector and a series of policy measures.
Hit by a lengthy U.S.-China trade war and a cyclical slump in the memory chip sector, Korea's economy is poised to report its weakest annual growth in a decade this year.
As part of the government's initiative to boost the economy through investment, state-run institutions will expand next year's investment to 60 trillion won from 55 trillion won for this year.
Also, the government will encourage private firms to spend 25 trillion won in large-scale investment projects.
Also on Tuesday, the Cabinet approved tax support plans to boost domestic consumption and corporate investment.
Under the plans, the consumption tax will be lowered by 70 percent for people who scrap their aged cars produced 10 years or more ago and buy new ones from next year.
The government will extend a temporary tax cut on purchases of all-electric and hydrogen fuel-cell electric cars to 2022.
For big companies, a tax deduction rate for their facility spending will be raised to 2 percent from 1 percent.
A tax deduction rate for small and medium-sized firms' investment will also be raised to 10 percent, the ministry said.
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