Korea’s top economic policymaker reiterated his opposition Monday to politicians’ demand to raise tax rates on rich people and businesses to finance additional welfare programs.
Ahead of parliamentary and presidential elections scheduled for April and December, political parties are rushing to unveil a spate of welfare programs and campaign pledges, many of which policymakers see as “populist” and fiscally “unsustainable.”
Some lawmakers claim that the government needs to raise tax rates on the wealthy and large businesses to fill the hole that could be caused to the budget from their welfare proposals.
“It would be a wiser taxation policy direction to expand the overall tax base ― without raising tax rates ― through ramping up transparency and economic growth,” Finance Minister Bahk Jae-wan told a conference held in Seoul.
“If we don’t want to follow in the footsteps of other advanced nations which fell into a welfare trap and fiscal crisis, we shouldn’t be forced to raise taxes by such excessive welfare programs.”
His opposition to a tax increase comes amid worries that such a move could undermine the nation’s growth potential by discouraging people from working and doing business.
“Tax rates should remain as low as possible while tax codes should stay as simple as possible. Broadening the tax base and lowering tax rates is what many textbooks are teaching,” he emphasized.
(Yonhap News)
