Taking the ax to taxes is the focus of a bill being drafted

People Power Party's floor leader Kweon Seong-dong, left, and Finance Minister Choo Kyung-ho during a meeting on Monday at the National Assembly in Seoul. [JOINT PRESS CORPS]

Tax changes in a government sponsored bill now being formulated will focus on reducing costs for small businesses and the self-employed.

The People Power Party held a meeting at the National Assembly on Monday with the government to discuss the legislation, which is part of a board tax reform effort.

"The tax reform is focused on encouraging the expansion of business investment and hiring amid difficult conditions while correcting punitive house holding taxes established during the previous administration," said PPP floor leader Kweon Seong-dong after meeting with Finance Minister Choo Kyung-ho. "It would lower tax payments by workers and the self-employed whose real incomes have been shrinking due to rising consumer prices."

Kweon stressed that the government has worked on increasing support for lower and middle-income Koreans struggling with inflation and retail investors who have made bad bets on stocks and cryptocurrencies.

"Our economy is facing a perfect storm," Kweon said, who added that the government is prepared to accept lower tax revenue in support of the vulnerable and the broke.

Choo noted that while any new tax legislation will be directed at those hit hardest by the economic turmoil, it will also be focused on supporting the development of private industry.

"By reforming taxes rationally accordingly to the global standard and principles, we will vitalize the private sector, businesses and the market," Choo said.

"The tax reform is centered on improving the tax competitiveness of businesses, changing the excessive corporate tax rates to expand the autonomy and creativity of the private sector, change the regulatory taxation system and lower inheritance taxes for the transfer of stakes in business," Choo said. "We also plan to normalize real estate taxation to stabilize housing security and lower costs faced by lower and middle-income households."

Since taking office in May, the Yoon Suk-yeol government has been pushing strongly for lowering the corporate tax rate from 25 percent.

"Our corporate tax compared to the average rate of major competing countries in the OECD is relatively high," said Finance Minister Choo on July 13. "We're considering lowering the corporate tax rate to 22 percent."

The tax rate was raised from 22 percent to 25 percent in 2017, the first year of the Moon Jae-in government.

The Yoon government has been stressing the need to reduce the role of the government in the economy while transferring the leadership to the private sector.

The government estimates that lowering the rate to 22 percent will likely reduce taxes by 2 to 4 trillion won ($1.5 -$3 billion).

Bills in Korea can be introduced directly by the government, but they must still be passed by the National Assembly, where the Democratic Party currently has a majority.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]