Value context and insight. lkm@koreatimes.co.kr
NTS distributes W5 tril. in Earned Income Tax Credit
National Tax Service (NTS) Vice Commissioner Kim Dae-ji / Courtesy of NTS
By Lee Kyung-min
By Kim Dae-ji
The government runs subsidy programs that distributed 5.03 trillion won ($4.2 billion) to 4.73 million households in 2019.
On average, this is 1.22 million won per household. These subsidy programs are the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) that are run by the National Tax Service (NTS).
The world's first EITC was introduced in 1975 by the U.S. government to provide financial support and act as an incentive for low-income recipients to continue working. Since then, the U.K., Canada and other advanced countries have begun similar programs.
The Korean government enacted its EITC program in 2006 and has provided subsidies since 2009.
In 2015, the CTC was additionally introduced to help low-income families afford childcare.
Such subsidy programs help low-income groups in society back into employment.
Under the management of the NTS, these programs play an important role as part of the social safety net along with social insurance programs and basic livelihood security programs that are operated by other government bodies.
This year, the government has expanded the program by increasing the number of recipient families and amount payable.
First, by lifting the current age threshold for single households, those aged under 30 can now benefit from the subsidy.
This change enables the NTS to provide 870.3 billion won to 1.03 million of working single householders in their 20s.
Further, the income ceiling to be a beneficiary of the programs has been raised from 13 million won to 20 million won for single households, from 21 million won to 30 million won for single-income families, and from 25 million won to 36 million won for double-income families.
The upper limit for the wealth threshold to get the benefit has also been raised from 140 million won to 200 million won.
In relation to the maximum amount of EITC, it has been increased to 1.5 million won from 850,000 won for single households, to 2.6 million won from 2 million won for single-income families, and to 3 million won from 2.5 million won for double-income families.
The maximum amount of the CTC was also raised to 700,000 won from 500,000 won per child.
Starting from this year, the NTS shortened the payable schedule of the EITC by allowing semiannual payments. In case of applying semiannual payments, recipients who are wage workers may receive the benefits twice a year based on their biannual income amounts.
A relevant law prescribes the payment process for EITC and CTC which starts with the recipients' request followed by an NTS qualification review and payment of the subsidy before the statutory due date of Sept. 30.
This year the NTS brought forward the date of payment to Sept. 6, before the legal deadline (Sept. 30) so recipients could have a good Chuseok, the Korean version of Thanksgiving.
A woman surnamed Han, the winner of an EITC and CTC essay contest, said that her two daughters were able to take painting lessons thanks to the subsidy.
Another winner of the contest surnamed Lee said the CTC helped with delivery expenses when she had her second child.
As seen from the stories of Han and Lee, I humbly hope the revised EITC and CTC programs can help low-paid workers.
Kim is National Tax Service vice commissioner.