One in four salaried workers in Korea, or some 4.3 million people, will see their tax burden increase from 2014.
The government will also levy taxes on religious leaders, including priests and Buddhist monks, starting in 2015.
The changes are part of the 2013 tax code revision proposal unveiled by the Finance Ministry on Thursday to boost the tax revenue base to meet growing fiscal demands.
The revision means that workers whose annual income ranges between 40 million won and 70 million won would have to pay an average of 160,000 won more than the previous year.
Those in the 70-80 million won and 80-90 million won income brackets would be levied an extra 330,000 won and 980,000 won, respectively, on a year-on-year basis.
The proposal reflects the Park Geun-hye administration’s desire to expand the state’s tax revenue, according to the ministry.
Finance Minister Hyun Oh-seok told a news briefing that the government “will continue the push to expand its weakened tax revenue base by streamlining tax benefit and reduction programs, regularizing the underground economy and other efforts without directly raising tax rates.”
Hyun said the money raised through such efforts will be channeled to the underprivileged through spending on social welfare.
Noteworthy in the revision is the imposition of tax on religious leaders, long a controversial issue in Korea.
Over the past few decades, governments have pushed plans to tax the clergy under the principle that there is tax where there is income.
However, the detailed policy is expected to invite another round of public criticism on the grounds of fairness or favoritism as the taxation of religious leaders will be different from that of regular income earners.
The Finance Ministry has classified the money from offerings doled out to pastors and monks as “extra income” rather than labor.
According to the ministry‘s calculations, a pastor who is paid 50 million won a year by the church will pay some 2.2 million won ($1,910) in taxes, a rate of 4.4 percent.
In contrast, a regular citizen with an annual income of 50 million won is subject to income taxes worth about 12 million won, when not considering deductions. This is the 24 percent tax rate based on the 2012 tax code.
Though the ministry earlier this year planned to regard the money paid to the clergy as earned (or labor) income, it eventually shifted its position, reportedly due to a strong backlash from some religious lobbies.
The Church Financial Accountability Network, an advocate for transparency in offerings, reiterated that taxation of the clergy was appropriate on fairness grounds.
“If additional preferred authority is given to religious leaders, there will still be hurdles between churches and ordinary people,” said a spokesman for the organization.
Over the past few decades, some angry citizens have continued to highlight a legal obligation for all Koreans to pay taxes, noting that clergymen are also Korean citizens.
According to a variety of polls, two out of three Koreans think the clergy should not be tax-exempt.
Some Catholic clergymen have voluntarily been paying taxes, after a decision was made in favor of taxation at a 1994 convention of bishops.
But few Protestant and Buddhist leaders pay taxes by simple convention that the National Tax Service has refrained from levying taxes on their incomes.
Imposing taxes on religious groups has provoked debate especially as former Finance Minister Bahk Jae-wan said in 2012 that all people must pay taxes without exception.
There are more than 360,000 priests, monks and other members of religious orders in the country. The government previously claimed that taxing those members was not a matter of increasing its revenue but a matter of establishing a fair taxation practice.
By Kim Yon-se (
kys@heraldcorp.com)
