Biz lobby claims hiking corporate tax would lead to economic slump

A South Korean business lobby said Sunday an increase in the corporate tax would slow economic growth, amid the opposition parties' push to increase burdens on companies.

The Korea Chamber of Commerce and Industry said the parliament should be more cautious when increasing corporate taxes, as the move would decrease the government's revenue as it would hurt business sentiment amid the prolonged economic slump.

A seminar on a corporate tax hike is under way in Seoul on Nov. 1, 2016. (Yonhap file photo)

The KCCI added that South Korean companies would also lose competitiveness against global rivals, as other countries are focusing on lowering such taxes.

A 1 percentage-point increase in the corporate tax would hinder the country's economic growth by 1.13 percentage points, the KCCI also said.

South Korea's ruling and opposition parties have been discussing whether to revise up corporate taxes as the government needs more funds for its welfare policies.

The three opposition parties claim the existing corporate tax rate of 22 percent, set by the previous Lee Myung-bak administration, should be returned back to 25 percent. The ruling Saenuri Party, however, says the government should not weigh down business sentiment, especially amid the prolonged economic slump.

"As an increase in the corporate tax leads to fewer jobs, the move is inappropriate in regards to welfare," the KCCI also said. (Yonhap)