Government to hold taxes, for now

Korea’s finance minister said Thursday that he has no immediate plan to raise income and corporate taxes, and would seek other ways to support President Moon Jae-in’s expanded fiscal role in creating jobs and boosting the economy.

“The government is looking into discretionary spending and unnecessary items in terms of government expenditures that can be adjusted and review plans to remove tax exemptions and other benefits,” Finance Minister Kim Dong-yeon told reporters after his inauguration ceremony in Sejong. “I’m not considering raising nominal tax rates, such as corporate and income taxes.”

On the campaign trail, President Moon promised to focus more on job creation and expanding welfare for young people. In particular, he said his government would create some 800,000 public jobs during his five-year term, grant an allowance to young job seekers and offer lower-rent public housing to newlyweds.

To complete his pledges, Seoul will need an estimated additional 178 trillion won ($158 billion) during his five-year term. The president had hinted at a hike in corporate and income taxes and a removal of tax exemptions and benefits to secure funds.

The finance minister also said he would make all-out efforts to convince the National Assembly to approve an 11.2 trillion won extra budget proposal, which is designed to create jobs and give subsidies to young job seekers, as soon as possible. No state bonds will be issued to cover up the extra budget this year. Instead, an excess of 8.8 trillion won in tax revenue will meet most of the outlays.

“The Korean economy seems to lose dynamism as people feel worse off than the actual data suggests,” said Kim, who took office last week. “The supplementary budget shows the government’s expansionary fiscal policies without issuing state debt.”

In order to cool down the overheating real estate market, Kim said the government would come up with comprehensive measures as soon as possible. “The property market is closely linked with the economy. I’m keeping close tabs on the matter.”

Yonhap