Parliament endorses revisions to income tax exemptions

The parliament agrees with the government that the current income tax exemptions need to be overhauled to create a stronger tax base, a report said Monday.

The report by the National Assembly's committee on budget and accounts assessing the 2015 fiscal year noted how the proportion of non-taxpayers was increasing from broadened exemptions over the past years. According to the report, 48 percent of income earners did not pay taxes in 2015, about the same as the previous year.

The non-tax paying population had reached a record 48.9 percent in 2005, but it fell to as low as 32 percent in the 2012-2013 period. It jumped back up to 48.1 percent in 2014 following income tax revisions in 2013. The revisions at the time gave bigger tax write-offs for people earning less than 55 million won ($47,700) a year.

After the revisions, the number of non-taxpayers among yearly income earners of 40 million won or above rose 11- to 14-fold, according to the report.

The tax base had actually increased in 2015, adding 26 trillion won from the year before to 592.9 trillion won. Compared to 2005, the sum marks a 67 percent jump.

"The tax base is increasing steadily, but the scale of tax-exempted income and other forms of tax write-offs have enlarged, creating more non-taxpayers." the report said. "The rising proportion of non-payers, coupled with the slowing increase in the tax base, can negatively affect the government's income revenue in the long run."

The government has made similar suggestions in the past. The finance ministry in September last year said it plans to revise income tax exemptions on mid- and long-term bases. Finance Minister Yoo Il-ho said during his confirmation hearing in January that he agrees with the argument that the number of non-taxpayers should be brought down. (Yonhap)