Political conflict puts tax refund in question

By Yoon Ja-young

The confrontation between the two rival parties over pension reform plans is disappointing taxpayers who were expecting to get part of their taxes back, as the lawmakers are delaying passage of the revision bill essential for the tax refund.

The government says the bill should pass at the National Assembly before May 11, or there will be utter chaos regarding the filing of taxes.

“If the revision bill doesn’t pass the National Assembly by May 11, it will be impossible to refund tax within this month as we have promised. Moreover, many people will have to file last year’s year-end settlement again,” Strategy and Finance Minister Choi Kyung-hwan said at the economic ministers’ meeting, Thursday.

In Korea, salaried workers pay a certain amount of income tax from their salaries every month. At the end of the year, the exact amount of tax is determined, taking into account diverse factors such as the number of family members they support, insurance payments, education and medical expenses, donations, and credit card spending.

The government adopted a new tax settlement scheme in 2014 for more equilibrium in taxation, but that brought a strong backlash as many workers paid additional taxes instead of getting refunds.

The government succumbed, suggesting a supplementary measure to lessen the burden on taxpayers, which includes providing more deductions for households with children or those who have subscribed to pension savings.

If the revision bill is approved at the National Assembly, the government expects around 6.4 million, or 39.4 percent of workers, to benefit, receiving a total of 456 billion won in tax refunds.

“When excluding those who are exempt from tax due to a low income, more than 50 percent of workers who are subject to the tax will get refunds thanks to the revision,” an official in charge of income tax at the ministry said.

The ministry regards May 11 as the deadline as it will take at least two weeks from the application for the tax refund until receiving the actual refund. If it is approved before May 11, the companies, which mostly pay workers their salaries on the 25th of each month, would be able to file for the tax refund for their workers and include it in their salaries for May.

If the revision bill passes the National Assembly after the deadline, each worker would have to visit the tax agency and do a tax filing to get the refund, since the law stipulates that businesses can only deal with a year-end tax filing until May.

However, as the governing Saenuri Party and the opposition parties are confronting each other over a reform of the government employees’ pension, it is doubtful the revision bill will pass the National Assembly by May 11.