(Reuters) - South Korea unveiled a $5.2 billion follow-up stimulus package on Monday, including tax breaks worth $2 billion, as the government tries to shore up Asia's fourth-largest economy in the face of the protracted debt crisis in Europe.
The steps would save taxpayers some 2.3 trillion won ($2.0 billion) in personal income tax, home transaction tax and domestic sales tax on automobiles and large electronics appliances, the finance ministry said in a statement.
"The fiscal crisis in Europe is continuing for a longer period than expected and the simultaneous slump in the advanced and emerging economies is continuing," Finance Minister Bahk Jae-wan said at a policy meeting.
The ministry said the package, which also includes a plan to make sure provincial governments spend their full budget allocations, would amount to 4.6 trillion won this year and 1.3 trillion won for next year, worth about $5.2 billion in total.
The measures were a follow-up to a $7 billion package in late June. Together, the stimulus packages are equal to about 1 percent of gross domestic product.
In June, the government had foreshadowed there could be further steps, so the market had been expecting an announcement.
The government has ruled out more direct measures to boost budget spending, saying it did not want to increase debt levels and fiscal soundness was important given Europe's problems.
After the country's export-reliant economy lost steam, the central bank cut interest rates in July for the first time in three years and is widely tipped to deliver another rate cut as early as Thursday.
($US1 = 1130.3000 Korean won)