Family Tax Breaks Cause Disparity in S.Korea
November 24, 2016 Taxation in South Korea
Tax benefits available to couples with children in South Korea have effectively increased the disparity between taxes paid by families and single taxpayers in the country, according to the results of new research released in the journal of the Korea Academic Society of Taxation.
South Korea has several tax breaks available for families with children, with the breaks being cumulative for more than one child.
The tax measures were enacted in order to counter the country’s dwindling birth rate, which currently sits at approximately 1.3 children per woman, while the worldwide average is thought to be approximately 2.5 per woman.
The results of the research indicated that the effective tax rate faced by single-person households is approximately 2.88 percent, while a couple with one child and a single income would face an effective tax rate of 2.53 percent.
The effective rate drops to as low as 1.24 percent for families with one working parent and two children.
It is expected that public pressure to equalize the tax treatment will increase in coming years, as currently single person households make up 27.1 percent of all households, with the rate set to rise to 34.3 percent in 2025.