Korean Opposition to Raise Taxes
February 27, 2012 Taxation in South Korea
SEOUL – Opposition parties in South Korea are announcing their proposed tax plans ahead of the upcoming elections, saying that taxes on the wealthiest members of society must be raised.
On February 26th two opposition parties in South Korea, the Democratic United Party and the United Progressive Party, announced their proposed tax policies, ahead of the upcoming April 11th general elections, with both parties planning to raise greater tax revenues to fund the nation’s superannuation system.
According to political experts in Korea, if elected, the Democratic United Party (DUP), is likely to pursue a number of significant changes to the tax system, levying great tax rates on personal incomes of the country’s highest earners, and will increase the taxes faced by the country’s largest companies.
It is expected that the DUP will lower the threshold for the top personal income tax from the current level of KRW 300 million to KRW 150 million, and will also increase the current top rate of tax on individual incomes to 38 percent, from the current rate of 35 percent.
Tax experts estimate that, if the changes are carried out, approximately 140 000 taxpayers in Korea will face the country’s new highest tax rate, compared to the current level of 31 000. The move is expected to garner an additional KRW 1 trillion in extra tax revenues for the government annually.
The DUP will also seek to raise the corporate income tax rate by 3 percent to 25 percent for businesses earnings in excess of KRW 50 billion. The change will result in an increase to total tax revenues of KRW 2.8 trillion for the Korean government.
The Unified Progressive Party (UPP), one of Korea’s opposition parties, also released its own tax proposals, suggesting to lower the top tax payment threshold for individuals to KRW 120 million, and raising the top personal income tax rate to 40 percent. If elected, the UPP would also seek to implement new legislation to raise the corporate tax rate by 8 percent to 30 percent.
Photo by Sherwin Huang