Favoring Cut In Taxes, GNP Urges Clarity, Rate Adjustment

Kim Mahn-je, chief policymaker of the opposition Grand National Party, made clear Monday that his party opposes the government's plan to expand income tax deductions. Mr. Kim said the rate of tax should be lowered instead.

Saying the plan is intended to curry favor with voters prior to upcoming elections, Mr. Kim said the government should not allow more deductions or increase limits on the maximum deduction for items currently allowed.

He said the change would force many low-income taxpayers to pay a higher percentage of their incomes in taxes than many wealthy citizens.

Lim Tae-hee, the opposition's policy coordinator, said, "The Ministry of Finance and Economy is making the taxation system more complex, which runs counter to the worldwide trend of simplifying tax structures for the convenience of the people."

He said his party would work toward reducing the tax burden on the middle class by adjusting tax rates, among other policies.

While the government said it agrees that personal and corporate taxes should be lowered in the longer term, it finds itself in an uncomfortable position as it must start next year paying back the principal on loans taken from the International Monetary Fund.

Tax collection is also made more difficult by the recent economic downturn, government officials say.

While many tax experts agreed that taxes should be lowered, they differ on how they should be lowered given the current business climate.

The government is taking a cautious attitude toward lowering personal income tax. "To adjust the tax amount, you should also revise the amount for each tax bracket as well as the tax brackets themselves," an official at the Finance Ministry said.

Kwak Tae-won, a professor of economics at Sogang University, said, "Expanding opportunities for tax deductions when more than half of wage earners and the self-employed are not paying their taxes is irresponsible."

While he agreed that tax rates should be lowered, Mr. Kwak said the timing of tax cuts is key since the government's finances are less than great at this point.

by Ko Jung-ae