The main opposition party vowed Tuesday to review the government’s new tax settlement scheme amid public anger over the larger tax burden for middle and lower income groups.
The revised tax scheme aims to collect less taxes throughout the year and return less in overcharge during tax settlements at the start of a new year.
The government’s stated goal is to enhance the distribution of wealth, but the new scheme has also resulted in some people with an annual income of less than 55 million won ($50,733) having to pay more in taxes. Before the revision, many wage earners were able to get tax refunds that were commonly referred to as a bonus or extra wage.
“We will actively study policies to relieve the tax burden, raise tax equity and restore the corporate tax rate to normal levels,” Rep. Woo Yoon-keun, the floor leader of the New Politics Alliance for Democracy, said during a party meeting. South Korea’s corporate tax rate on taxable income exceeding 20 billion won was lowered from 25 percent to 22 percent during the previous Lee Myung-bak administration.
“The warehouses of conglomerates are overflowing, while the glass wallets of ordinary citizens are being emptied,” he said.
“Glass wallet” is a term used to describe the “transparent” income of ordinary wage earners.
Woo accused President Park Geun-hye’s conservative administration of favoring large businesses at the expense of average wage earners, citing data that the corporate reserves of conglomerates amounted to 552 trillion won last year, double the amount five years earlier.
The opposition party will study ways to revise the law to raise the tax credit rate from 15 percent to 20 percent during next month’s extra parliamentary session, he added.
The ruling Saenuri Party expressed frustration as the government’s efforts to defuse the controversy only invited stronger criticism.
In a hastily arranged press conference earlier in the day, Finance Minister Choi Kyung-hwan said the extra money collected, mainly from high-income earners, would be used to finance two government programs aimed at helping low-income self-employed workers and encouraging people to have more children. He also said the government will consider adjusting tax deduction categories to give more benefits to families with children and help people prepare for retirement.
“The government shouldn’t be bent on temporarily stitching up the problem but think carefully about how to address the public’s mistrust in the fairness of the tax system and come up with a solution as soon as possible,” Kim Young-woo, the ruling party’s senior spokesman, said in a press briefing. “The Saenuri Party will do its best to find a more reasonable way that strikes a balance between welfare and the tax burden.”
President Park Geun-hye also addressed the controversy.
“It’s important that (the public) thoroughly understand (the issue),” she told Choi ahead of a Cabinet meeting at the presidential office earlier in the day. (Yonhap)
