Saenuri promises tax refund in May
“The government promised to revise the system so that lower-income brackets would have their tax burden reduced and higher-income brackets would pay more, but it eventually stirred complaints from a great number of people and it’s definitely wrong,” said Saenuri leader Kim Moo-sung in a party meeting in the morning.
But in his apology, Kim roped in the opposition as well. “I feel very sorry,” he said, “that both the ruling and opposition parties passed the amendment to the tax bill 245 to six.”
The National Assembly passed a revised tax bill at the end of 2013 that was first applied to income taxes for 2014. The annual settlement season kicked off at companies on Jan. 15 and many middle-class employees are discovering that their usual tax refund won’t be coming this year. Others are being forced to pay additional taxes beyond what was withheld from their paycheck.
The Saenuri leader’s comments were followed by an emergency meeting between Saenuri representatives and the Ministry of Finance to discuss countermeasures.
Under a proposed agreement, the National Assembly would again amend the tax law in April to reduce the tax burden. The Saenuri expects tax refunds for some taxpayers would take place as early as May. The priority will be on households with children and single households. Raising tax deductions for pension insurance policies for retirees and the elderly was also discussed.
The government said it will complete an analysis of the changes in the tax bills for 2014 by late March.
Furor over what is now being called the “tax bomb” - rising tax bills on the middle class that weren’t supposed to happen - led the Korea Taxpayers Association to launch a petition campaign to reverse the changes in the tax law.
In the past, many middle-class workers received refunds after the tax settlement process that were large enough to be considered a kind of “13th-month bonus.” Many ordinary office workers expect the refunds every year.
Under the revised tax laws, about 13 million workers with an annual income of less than 55 million won ($50,700) will actually pay less tax. But last year, the government said people who make between 55 million won and 70 million won would see their taxes go up only a marginal amount - between 20,000 won and 30,000 won per person.
In reality, the increases for some middle-class salary earners will be 10 times that amount.
“Company employees have no choice but to borrow money when their taxes, health insurance fees and prices of goods go up and their salaries remain the same,” said Kim Sun-taek, president of the Korea Taxpayers Association.
The private association did its own calculation of the new tax system. It showed those single salaried workers earning between 23.6 million won and 38 million won a year will have to cough up 170,000 won more in income taxes for 2014 compared to 2013. Workers who earn around 60 million won a year or who gave birth to a child in 2014 will see their tax bill increase by 340,000 won compared to a year earlier.
The six lawmakers who opposed the change in the tax laws said it was impossible at the time to even discuss the matter with fellow lawmakers.
“The impact of the revised bill was obviously going to be enormous, and passing it without even having a simulation [of how it would affect workers] was systematically wrong,” said Rep. Lee Choon-suak of the main opposition New Politics Alliance for Democracy, who voted against the bill.
BY SEO JI-EUN [email@example.com]