Party Plans To Tighten Wealth Tax

The ruling party plans to introduce a "comprehensive approach" to taxing inheritances and gifts in order to close loopholes in the system, a party policymaker said.

The new approach would add to the list of taxable items, so that taxes cannot be circumvented. At present, taxes are levied on a set number of items stipulated by the law, and wealthy people have been devising financial products that fall outside the legal definitions.

"We plan to levy additional taxes on illegal wealth and we also plan to introduce a comprehensive approach to the income tax system in the long run," said Kang Un-tae, deputy policymaker of the ruling Millennium Democratic Party. He said he hoped legislation could be enacted in September.

But Lee Yong-seop, director general of taxation at the Ministry of Finance and Economy, said, changing the law is "unlikely this year" because of possible constitutional questions. The ruling party and the government also plan to merge various taxes on education, transportation and agriculture into the corporate tax system.

On April 11, the National Tax Service levied an estimated 60 billion won ($47 million) in gift tax on Lee Jae-yong, son of Samsung chairman Lee Kun-hee. A Samsung affiliate had issued bonds with subscription warrants that had the effect of transferring wealth within Mr. Lee's family at below-market prices.

by Lee Jung-min