Gov't buckles under salaried workers' wrath

Finance Minister Choi Kyung-hwan speaks during a press conference to explain the government’s year-end tax settlement scheme in Seoul, Tuesday. / Korea Times photo by Shim Hyun-chul

By Yoon Ja-young

Strategy and Finance Minister Choi Kyung-hwan said the government will consider revising tax return regulations, as salaried workers protest that many of them are likely to pay additional taxes this year.

“We will look into how the tax burden of each income bracket has changed to optimize taxes,” Choi said, at a hastily-arranged media briefing Tuesday.

The briefing was held amid increasing anger from workers who are expected to pay additional tax in their year-end tax settlement. As many workers used to get tax refunds after the settlement, it was referred to as the 13th month salary or bonus.

Since the tax return system revision, a considerable number of workers are complaining that they will be paying additional taxes after the settlement, instead of receiving a refund.

Park Min-tae, an office worker at a trading company in Seoul, for example, got around 1 million won in tax back last year. He expected to get more this year as he and his wife had their second child last year.

However, a simulation showed him he would have to pay 600,000 won more taxes after the year-end settlement, without any refund.

“Some senior managers at my company say they are paying 2 million won additional tax. Maybe I should be thankful that I am paying only 600,000 won,” he said.

The government previously collected high taxes throughout the year and then refunded the overcharge after the year-end settlement. After the revision, it collects less throughout the year, and the refund also decreases.

The revision also included replacing income deductions with tax deductions, which resulted in more tax burden for those on higher salaries. Females, households with children, and singles will also end up seeing less deductions.

Choi said that the tax return system was revised to “increase the tax burden on high-earners, while decreasing tax burden on the low-earners.” He said taxes from those with a high income will be spent to support low-income households.

According to the finance ministry, around 15 percent of salaried workers will be paying more taxes than last year. It says those earning between 55 million and 70 million won a year will be shouldering between 20,000 and 30,000 won more tax on average, while those with more than 70 million won in income will be paying 1.3 million won more than before.

Korea Tax Internet, an NGO of taxpayers, has a different story, however. According to its simulation, a salaried worker who earned 50 million won and gave birth to a child last year is shouldering 310,000 won more in tax due to the revision. Singles earning between 23.6 million won and 38 million won meanwhile will be subject to up to 310,000 won more taxes than before.

“Any tax revision requires thorough simulation, but the government hastily revised the regulation in a few months,” said Kim Seon-taek, president of the organization.

“The government should apologize to taxpayers in such cases, but it seems that the government doesn’t even know what caused the outrage,” he added.

The finance minister admitted there could be differences among individual taxpayers depending on the tax deduction items, or the number of family members to support.

The finance ministry is considering providing deductions for childbirth, which was scrapped in the 2013 tax reform, or giving more tax deductions depending on the number of children or contributions to pension schemes.