By Yoon Ja-young
Staff Reporter
Salaried workers will pay 3 to 69 percent less income tax from August but it doesn't necessarily mean that individuals will be paying less income tax through the year as tax refunds will also be cut at the end of the year.
The Ministry of Finance and Economy (MOFE) Monday changed the deduction in the earned income tax table. The table shows how much tax the employer should withhold before giving salaries to workers. The amount of tax changes according to such criteria as the amount of salary or the number of family members.
Currently, however, salaried workers have been paying more taxes than they should each month, giving them a big refund around the end of the year, depending on their spending in insurance, health and education expenses, housing, and credit card fees.
In 2005, for instance, workers got 4.5 trillion won in tax refunds around the end of the year, from the 13.7 trillion won income taxes that the government collected from them.
With the moderation in the tax table, taxpayers will be paying less each month, but will also get less in refunds.
For example, a salaried worker with a wife and two children aged under 20, making 30 million won ($32,513) a year, will pay 84,000 won less tax each year, as the monthly income tax will decrease 20.8 percent to 26,590 won from the current 33,570 won.
Those who make 20 million won a year, meanwhile, will pay 69.5 percent less income tax, and those who are paid 50 million won will pay 13.3 percent less.
As the tax refund each employee can get around the end of the year also decreased, the tax burden may actually increase for some workers, the ministry said.
``Around 30 percent of paid taxes used to be refunded around the end of the year, but the refund is expected to fall by around half after changing the tax table,'' a ministry official said. He said the effect of the measure on the tax revenues is neutral.