Value context and insight. lkm@koreatimes.co.kr
Salaried workers upset over tax increases
Gettyimagesbank
By Lee Kyung-min
By Lee Kyung-min
The tax on salaried workers' earned income has grown at nearly twice the rate of their income rise, enraging workers, data showed Monday.
Data from National Tax Service showed the agency collected 41.9 trillion won ($34.8 billion) in earned income tax in 2019, up 7.5 percent, or 2.9 trillion won from a year earlier.
This shows a much faster rise than their income that jumped only 4.1 percent in 2019 from a year earlier. Also contrasting sharply with the 7.5 percent year-on-year tax increase on earned income is the tax revenue total which jumped to 303.4 trillion won in 2019, up 3 percent from a year earlier.
Tax on salaried workers is still increasing much faster than corporate tax that reported a 1.7 percent year-on-year increase of 72 trillion won in 2019 and value-added tax that recorded a 1.2 percent year-on-year increase of 71 trillion won in the same period.
Tax revenue collected from salaried workers more than doubled in the past decade, whereas their average income rose a meager 4 percent year-on-year in the same period.
The tax burden shouldered by the salaried workers is felt greater due to increased government spending on welfare among other initiatives, according to Yonsei University economist Sung Tae-yoon.
“The much-hyped income-led growth has proven ineffective, illustrated by heavier tax on most salaried workers who are far from enjoying what would have been greater purchasing power had it not been for excessive spending in recent years.”
Meanwhile, despite the 3 percent year-on-year jump in the NTS-collected revenue in 2019, the net tax revenue income came at 284 trillion won, up 0.3 percent from a year earlier. This is far smaller than the net amount in 2018 when the figure reported a 10.9 percent increase from the year before.
The 2019 figure reporting a smaller net amount came due to increased central government spending of 13.2 trillion won to help municipal governments, up 45 percent from 9.1 trillion won a year earlier.
Also higher was the government spending of 5.6 trillion won in earned income tax credit (EITC), an initiative to help low-income earners, nearly triple the 1.8 trillion won spent the year before.
Among the sources of hiked tax revenue were a property tax imposed on homes worth over 900 million won. The tax collected in 2019 stood at 2.7 trillion won, up 42.6 percent, or 800 billion won from a year earlier when the figure was 1.9 trillion won.
Also reporting substantial increases were the inheritance and transfer taxes. Inheritance tax collected stood at 3.2 trillion won in 2019, up 11.4 percent from 2.8 trillion won a year earlier, while the figure for transfer tax stood at 5.2 trillion won, up 14.3 percent from 4.5 trillion won in the same period.