The Cabinet on Tuesday approved a temporary tax cut on purchases of passenger cars in a bid to boost sluggish private spending.

The revised enforcement ordinance calls for lowering special consumption tax on passenger car purchases from five to three-point-five percent until the end of this year.

It will take effect following the president's approval and will be applied retroactively to cars that were produced from July 19th.

The tax cut is set to lower the cost of a 20 million won vehicle by around 430-thousand won, while a 25 million won car will cost some 540-thousand won less.

The government forecasts the stimulus measure will raise private consumption by as much as point-two percentage point this year and gross domestic product by as much as point-one percentage point.