Budget to grow 11.7%; corporate tax trimmed

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Budget to grow 11.7%; corporate tax trimmed

The National Assembly on Friday passed a 112 trillion won ($86 billion) state budget for next year, after trimming 680 billion won from the executive branch's original request.

Nearly 2 trillion won of budget items were slashed and 1.4 trillion won was added.

The two opposition parties, the Grand National Party and the United Liberal Democrats, which hold a majority of the seats in the legislature, succeeded in trimming one percentage point from the corporate tax rate, half of what they had sought.

The new rates mean that, beginning next year, if a company's net profit is 100 million won or more, a 27 percent tax will be levied. The rate will be 15 percent tax for companies making less than 100 million won.

Earlier Friday, Representative Chung Se-kyun of the governing Millennium Democratic Party submitted a bill calling for leaving the corporate tax rate intact. Floor leaders from the governing and opposition parties ironed out the matter.

A bill to reduce the National Intelligence Service's budget by 8 billion won also passed the plenary session Friday.

Next year's state budget is 11.7 percent more than this year's. The National Assembly debated the bill for 19 days, well beyond the legal deadline of Dec. 2.

Most of the adjustments took place over pork-barrel projects. The Grand National Party had called for a 10-trillion-won cut, but then decided to grant much of government request in return for including many of its own pork-barrel projects.

Tax collections are budgeted to rise by 8 percent ?double the forecast rate of economic growth for next years.

"It looks as if 600 billion won was slashed," a government official said, "but in reality, many budget items were replaced with pork-barrel projects in light of elections next year."

Moving the South Jeolla provincial office, building a new airport in Jeonju, building a kimchi museum in Gwangju and other hotly debated projects all passed Friday's session as the governing party wanted.

The North-South Cooperation Fund was reduced by 10 billion won out of 500 billion won. The Grand National Party originally called for a 100 billion won cut.

In return, the Grand National Party got a new bridge and a road near the port in Busan.

by Lee Soo-ho

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