The government and the ruling party have reached a consensus to raise the minimum annual salary subject to increased taxes starting next year amid criticism that their latest tax code revision plan increases the tax burden on salaried and middle income people, informed sources said Tuesday.
According to the sources, the government and the ruling Saenuri Party shared the view to raise the minimum annual salary subject to the tax hikes to over 55 million won (US$49,300) from the 34.5 million won set in the initial tax code overhaul proposal.
The agreement comes amid heated debate over the government's recently proposed tax code revision plan that critics claim focuses more on increasing the tax burden on salaried and middle class people.
Under the initial bill unveiled on Thursday, 4.34 million people, who account for about 28 percent of salaried workers, will see their tax burden grow from next year, according to a government estimate.
People who earn between 34.5 million won and 70 million won will have to pay an average of 160,000 won in additional taxes annually from next year.
In the face of strong criticism not just from both opposition and ruling parties, President Park Geun-hye ordered her Cabinet to review the code overhaul proposal and Finance Minster Hyun Oh-seok subsequently pledged to do so "as quickly as possible."
The discussion is underway ahead of the government's plan to submit its revised proposal to a meeting of lawmakers in the afternoon. Its annual tax revision plan, which reflects the latest economic conditions and longer-term tax policy directions, requires parliamentary approval before going into effect.
If the minimum salary is raised as expected, the number of people subject to more taxes will be reduced from 4.34 million to 2.1 million, they noted.
This would end up shrinking the government's expected tax revenue by about 300 billion won. In order to fill the revenue gap, the government is considering toughening its crackdown on tax evasion attempts by high-income earners, the sources said. (Yonhap News)
