Critics are ready for Round 2
For instance, Kim Ki-mun, chairman of the Korea Federation of Small and Medium Business, said at a press conference Tuesday that the upper cap on the inheritance tax credit for small family-run businesses should be raised to 100 billion won ($89.3 million), up from the current 30 billion won proposed by the government.
Kim also pointed out that requirements for businesses eligible for the tax credit should be eased from the current 20 billion won in sales to 1 trillion won.
“The government lacks understanding about the reality of the small business tax burden, and there is no mention about it in the tax reform plan,” Kim said.
He added that many primary contractors of conglomerates are bigger than the minimum sales standard set by the government, so they can’t receive the tax credit benefits even if they are in urgent need.
The organization plans to send its opinion on behalf of small enterprises to the National Assembly in September.
The chairman also suggested it would be better if the government exempts all inheritance taxes when assets are being passed to descendents and levy them instead through capital gains taxes when those assets are later sold.
It is notable that organizations representing particular groups have begun raising their voices about the government’s latest tax reform plan.
The Finance Ministry had to revise its original plan, announced last Thursday, after the president told her finance minister on Monday to lessen the burden on the middle-income bracket.
Since the ministry said in the new plan that it will enhance taxation on self-employed businesses with high incomes and religious groups, massive criticism may follow in the near future.
“The government has no specific plan to start taxing the clergy and even no detailed standards for taxable high-income, self-employed people that could be withdrawn or revised again when groups take issue with it,” said a research fellow at a private economic research institute. “The current economic team is quite idealistic in terms of making policy, and this sparked the latest controversy over the tax code reform.”
Although the ministry said it has reached an agreement with religious groups about taxation, some conservative entities are refraining from public announcements.
The government hasn’t yet studied how many taxable religious populations there are or what tax rate would be appropriate for them. The taxation reform is set to begin in 2015.
Due to the Finance Ministry’s blunder in devising tax policies, criticism of the current economic leadership is growing. Some in political circles are already talking about the possible replacement of the country’s economic chief.
However, Hyun Oh-seok, deputy minister for the economy and finance minister, said the new tax plan will be enough to fund Park’s 135 trillion won in welfare pledges. “There will be no reduction or cancellation in the Park government’s welfare pledges,” Hyun said in a ministerial meeting yesterday.
BY SONG SU-HYUN [email@example.com]
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