The Ministry of Strategy and Finance said Monday that it was considering reducing tax-exemptions and benefits “comprehensively” and across the board, in line with President Park Geun-hye’s pledge to boost welfare spending for the middle class.

The downsize of tax benefits could apply to foreign investors, but an official at the Finance Ministry said that nothing had been decided yet regarding tax revision for foreigners.

A local newspaper reported that the Finance Ministry had begun looking into ways to reform taxes as applied to foreign investment.

The ministry is seeking to reduce or eliminate benefits including tax cuts for foreigners with exceptional or high-tech skills, as well as for foreign banks that had been exempted from income tax on interest income and commission gains from foreign currency-denominated loan extensions to domestic lenders.

The report, citing unidentified sources, said the revisions could be made as Korea’s technology had gained global recognition, and because income tax exemptions on foreign financial transactions could go against global standards.

The Ministry of Strategy and Finance recently began looking into the matter by launching a committee to secure 48 trillion won ($44.4 billion) through tax reform.

President Park seeks to spend some 135 trillion won over the next five years in office for welfare expansion to boost the livelihoods of low- and middle-income families and encourage births as the Korean economy faces an aging population, low birth rate and a lack of quality jobs.

The substantial welfare budget is being questioned on feasibility grounds, but Park’s administration claims it can secure enough revenue by uncovering the black market, and exposing big companies that illicitly channel their money into overseas tax-havens.

Korea is known to have a bigger underground economy than other OECD countries due to the high number of self-employed people. The private Hyundai Economic Research Institute estimated that the size of the nation’s underground economy last year at about 290 trillion won.

At the National Assembly, some lawmakers are seeking to raise the price of cigarettes by more than 2,000 won per pack to reduce the smoking rate and secure funds for welfare programs.

By Park Hyong-ki  (hkp@heraldcorp.com)