By Lee Hyo-sik
Staff Reporter

Prime Minister Chung Un-chan told lawmakers Tuesday that he would like to reconsider the planned income tax rate cut, clashing with one of President Lee Myung-bak's key policy pledges.

But he said the planned corporate tax reduction should go into effect as planned next year to help bolster sluggish corporate investments.

``From my personal view, I think we should reconsider lowering income tax rates. But given the continued stagnant business spending, we need to proceed with the planned corporate tax cut,'' the prime minister said.

But on the same day, Strategy and Finance Minister Yoon Jeung-hyun vowed again to cut income tax rates as planned next year. ``The Korean government should help boost the slowly recovering economy through greater fiscal spending and tax cuts as in other countries,'' Yoon said.

Despite growing calls for the scrapping of the planned income tax reduction for the sake of fiscal health, the minister has said the tax cut will be made on schedule in 2010, stressing that it will help businesses make investments and hire workers, producing greater outputs and more tax income.

Under the revised income tax law next year, the rate for individuals earning over 88 million won will fall to 33 percent, while those making 46-88 million won in taxable income will be subject to a 24-percent rate.

Individuals receiving between 12 and 46 million won will pay 15 percent of their income as taxes, down from the current 16 percent.

But opposition parties and civic groups have been calling for the suspension of the planned reduction in a bid to slash the widening fiscal deficit.

As a compromise, Rep. Lee Hye-hoon of the governing Grand National Party and some other lawmakers have recently floated the idea of hiking the tax rate for those earning over 100 million won in taxable income to 35 percent, and for individuals earning between 88 million won and 100 million won to 33 percent

This way, the government can continue its other tax cuts, while securing more revenue to reduce the budget shortfall, they said.

leehs@koreatimes.co.kr