Ruling Saenuri Party Chairman Rep. Lee Jung-hyun on Monday promised business representatives he would prevent the opposition parties’ push to raise the corporate tax.
In a meeting arranged by the Korea Chamber of Commerce and Industry, Lee said, “I know nothing about the economy … but our Saenuri Party clearly and sternly opposes corporate tax.”
He also said the party will continue to work to ease regulations and prevent the opposition’s push against the government’s labor reforms.
Saenuri Party chairman Rep. Lee Jung-hyun prepares to deliver a speech at a morning meeting arranged by the Korea Chamber of Commerce and Industry on Monday in Seoul. (Yonhap)
The main opposition The Minjoo Party of Korea has proposed raising corporate taxes, which were reduced in the previous administration, claiming the system increases by allowing wealthy business owners to fill their coffers instead of pushing them to invest and hire more.
It has introduced a revision to the Corporate Tax Act to raise the richest companies’ corporate tax rate from 22 percent to 25 percent. It would apply to companies with annual earnings of at least 50 billion won.
Under the current code, 10 percent is levied on companies with income of less than 200 million won, 20 percent on those earning up to 20 billion won and 22 percent earning more than 20 billion won.
The revision would affect some 417 companies, or 0.14 percent of corporate tax targets, through which the Minjoo Party contends would lead to an additional 4.1 trillion won in tax revenue per year.
The main opposition with 121 seats in the 300-member National Assembly have also claimed that the government was implementing expansionary fiscal policy while cutting taxes, which it said led to the rise in the national debt by some 40 trillion won annually. The third-largest People’s Party with 38 seats has also expressed agreement with the Minjoo Party.
The ruling Saenuri Party and the critics have argued that an increase in corporate taxes could drive local first to relocate overseas and distract foreign investment.
Some critics have also claimed that a hike in corporate taxes will eventually hurt the employees, shareholders, investors and consumers that could lead to a cut in wages and reduction in household income. They also cite the trend in other economies such as the US, Japan and Singapore that have been lowering their corporate taxes to attract investment and create jobs.
Lee, meanwhile, said that the corporate tax rate was cut even during the progressive governments.
“They claim that a 3 (percentage point) hike would lead to extra 3 to 4.1 trillion won, but it is said that the National Tax Service has already collected 16 trillion won through system overhaul.” (khnews@heraldcorp.com)
