Main opposition stresses fair taxation, vows to ease economic
polarization
The main opposition Democratic United Party on Sunday confirmed its election platform on tax reforms which seeks to apply the highest income tax rate to more rich people and increase corporate taxes on the country’s top conglomerates.
The move comes as the party is stepping up efforts to court voters ahead of the April 11 general elections, claiming that the gap between the haves and have-nots has widened due to incumbent government’s economic policies favoring the rich.
The party announced its tax overhaul plan, underscoring that it aims to enhance equality in taxation, securing finances for its envisioned welfare programs and ease economic polarization.
Under the plan, the party will apply the top income tax rate of 38 percent to those who earn more than 150 million won ($133,000) per year. Currently, the rate is applied to those who make an annual income of more than 300 million won.
Officials said that the change will increase the number of people subject to the top rate to 140,000 from 31,000 and the annual tax revenue by 1 trillion won.
To slap more taxes on top conglomerates, the party plans to increase the top corporate tax rate applied to firms earning more than 50 billion won per year to 25 percent from the current 22 percent. With other adjustments to the current taxation system, the party expects additional tax revenue of some 2.8 trillion won per year.
Also as part of efforts to shrink the top enterprises’ tax benefits, the party plans to exclude dividends from their investments in their affiliates and the interest on loans for their investment in subsidiaries from the items subject to tax deduction.
Through the envisioned tax reform, the party believes that it can secure additional tax revenue of 15-16 trillion won annually during the next administration should it be able to pass it through parliament.
Meanwhile, the minority left-wing Unified Progressive Party pledged to seek to increase the top income tax rate to 40 percent from the current 38 percent, and revise downward the income level for the top rate to 120 million won from the current 300 million won.
Taxation has always been one of the ideologically divisive issues.
President Lee Myung-bak and his ruling Saenuri Party have sought to curtail taxes for the rich and top enterprises, claiming that the cuts will help boost business activities, investments and consumption, and create jobs.
They have stressed that such “economic benefits” in the top echelon will “trickle down” to the low-income brackets. However, critics argue that such economic polices have not been effective and only deepened economic polarization.
With such criticism, the ruling party is also mulling a series of policies that could appeal to the ordinary citizens, a move its hard core supports criticized for “moving leftward.”
The main opposition Democratic United Party on Sunday confirmed its election platform on tax reforms which seeks to apply the highest income tax rate to more rich people and increase corporate taxes on the country’s top conglomerates.
The move comes as the party is stepping up efforts to court voters ahead of the April 11 general elections, claiming that the gap between the haves and have-nots has widened due to incumbent government’s economic policies favoring the rich.
The party announced its tax overhaul plan, underscoring that it aims to enhance equality in taxation, securing finances for its envisioned welfare programs and ease economic polarization.
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| Han Myeong-sook (center), leader of the Democratic United Party, holds a press conference explaining its tax reform plan at the National Assembly in Yeouido, Seoul, on Sunday. (Yonhap News) |
Under the plan, the party will apply the top income tax rate of 38 percent to those who earn more than 150 million won ($133,000) per year. Currently, the rate is applied to those who make an annual income of more than 300 million won.
Officials said that the change will increase the number of people subject to the top rate to 140,000 from 31,000 and the annual tax revenue by 1 trillion won.
To slap more taxes on top conglomerates, the party plans to increase the top corporate tax rate applied to firms earning more than 50 billion won per year to 25 percent from the current 22 percent. With other adjustments to the current taxation system, the party expects additional tax revenue of some 2.8 trillion won per year.
Also as part of efforts to shrink the top enterprises’ tax benefits, the party plans to exclude dividends from their investments in their affiliates and the interest on loans for their investment in subsidiaries from the items subject to tax deduction.
Through the envisioned tax reform, the party believes that it can secure additional tax revenue of 15-16 trillion won annually during the next administration should it be able to pass it through parliament.
Meanwhile, the minority left-wing Unified Progressive Party pledged to seek to increase the top income tax rate to 40 percent from the current 38 percent, and revise downward the income level for the top rate to 120 million won from the current 300 million won.
Taxation has always been one of the ideologically divisive issues.
President Lee Myung-bak and his ruling Saenuri Party have sought to curtail taxes for the rich and top enterprises, claiming that the cuts will help boost business activities, investments and consumption, and create jobs.
They have stressed that such “economic benefits” in the top echelon will “trickle down” to the low-income brackets. However, critics argue that such economic polices have not been effective and only deepened economic polarization.
With such criticism, the ruling party is also mulling a series of policies that could appeal to the ordinary citizens, a move its hard core supports criticized for “moving leftward.”
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