Assembly to mull cutting tax breaks for well-to-doThe government is looking into levying higher taxes on high-income earners by setting limits on the maximum tax benefits they are entitled to. People who make over 100 million won ($92,105) a year would be targeted.
The move comes as the issue of low tax rates on high income earners and companies has become a key subject ahead of the Dec. 19 presidential election.
“To prevent any excessive overlapping of tax breaks and tax cuts, we have proposed setting a limit on tax benefits to the National Assembly’s Strategy and Finance Committee,” Finance Minister Bahk Jae-wan said on Saturday.
The details will be submitted to the Assembly later this week. If approved, they will be imposed next year.
Until now, the only limit on tax returns for salaried workers who make more than 100 million won has been on the tax benefits they receive on credit card spending.
Some basic tax benefits, such as those related to child raising and medical payments for the physically or mentally challenged, are not included in the planned cuts.
At present, a rate of 7 to 9 percent is applied on the tax base of small and midsize companies. Conglomerates pay 14 percent, and those in between 10 to 11 percent.
Private entrepreneurs pay 35 percent on the actual tax. After converting to the tax base, this would equate to 13.3 percent.
The government is hoping to raise the rate to 15 percent for conglomerates and 40 percent for entrepreneurs.
Lawmakers from the ruling and opposition parties have called for even stronger measures.
The Saenuri Party and the Democratic United Party have turned in revisions of existing tax bills that would either raise the maximum tax rate for high-income earners or lower the tax bases that would apply to those who pay the highest income tax rate.
Those who make over 300 million won a year have to pay 38 percent of their income at present.
The Saneuri Party is proposing lowering that base to 200 million won, while the DUP wants it set at 150 million won.
The finance minister opposed raising the rate, insisting such a move could backfire and hurt the economy as the slowdown is already causing private spending to shrink.
By Lee Ho-jeong, Song Su-hyun [email@example.com]