Gov’t announces plan to raise tax on wealthy

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Gov’t announces plan to raise tax on wealthy

The Moon Jae-in government’s de facto transition team announced Thursday a plan to raise taxation on major conglomerates and the wealthy while increasing benefits for small businesses and low-income households.

“The Moon Jae-in government will be strengthening the wealth distribution through taxation that has been distorted [by past administrations] with tax cuts for the wealthiest,” said Park Kwang-on, the spokesman for the Presidential Advisory Committee for State Affairs Planning.

Park said the goal is to create an economy where everyone is equally wealthy.

However, the spokesman said that as the Moon administration was launched without a transition period, the more sensitive tax reforms that require public consensus will be approached gradually starting next year.

He said that a special committee made up of experts on tax reform will be created in the second half of the year and work on a mid-to-long term “road map.” The tax reforms will include the possibility of raising corporate taxes as well as fuel taxes.

The government recently said it has no immediate plans to raise the tax rates on diesel, which is thought to be a major air pollutant contributor, after a strong public backlash as many of the small businesses that depend on trucks that run on diesel felt threatened by the possibility of the additional financial burden. The government will also be working on a separate tax reform bill that will raise the benefits supporting low-income households and small businesses.

The reform bill will include an increase on tax credits toward the monthly rent of households with a total annual income less than 70 million won ($61,400) and a special tax break for small businesses following the raise in the minimum wage that the government is currently pushing for.

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