By Lee Tae-hoon
Two opposition parties separately proposed Sunday to raise taxes on the rich and large companies in an apparent move to secure necessary funding to carry out campaign pledges of boosting the nation’s welfare system.
Rep. Lee Yong-sup, the chief policy maker of the main opposition Democratic United Party (DUP), said that his party has decided to revise tax laws so that the top 1 percent of income earners and conglomerates bear a greater tax burden.
“Social polarization has been aggravated because the government’s role to redistribute wealth has weakened due to 90 trillion won ($79.8 billion) in tax cuts for the rich and its push for the four-river restoration project during the Lee Myung-bak administration,” the lawmaker said.
The Lee administration injected some 30 trillion won into the river dredging project, despite fierce resistance from liberal parties, which claimed that it lacked a feasibility study and would lead to negative environmental consequences and a budget crisis.
The DUP policy head said his party will seek to raise the income tax rate from 35 to 38 percent for those with a taxable income of more than 150 million won per year in an effort to generate additional annual revenue of 1 trillion won.
Observers say the move will likely trigger strong criticism from high income earners as it has been less than three months since the National Assembly passed its own version of the Buffett tax that applies a steeper tax of 38 percent to those making more than 300 million won a year.
As for corporate tax, whose maximum ceiling the pro-business Lee administration lowered from 25 percent to 22 percent in 2009, Rep. Lee said the DUP will seek to impose 25 percent on businesses with a taxable income of more than 50 billion won.
Under the DUP’s plan, the government would levy a rate of 22 percent on companies with taxable income of between 200 million and 50 billion won and 10 percent on those making less than 200 million won.
The DUP official said his party forecasts that the government will secure additional annual revenue of 2.8 trillion won by raising the corporate tax rate on “the top 0.1 percent of corporations.”
He noted that the DUP will push to increase tax in relation to national income from the current 19.3 percent to 21.5 percent by 2017 to launch new welfare projects.
Meanwhile, the minor opposition United Progressive Party (UPP), announced a plan to lower the highest individual income tax ceiling from 300 million won to 120 million won and increase the maximum tax rate from the current 38 percent to 40 percent.
The UPP also pledged that it would push to raise the corporate tax rate from the current 22 percent to 30 percent on conglomerates with a taxable income of more than 100 billion won.