Unprecedented tax revenue boom¡¦¡®Corporate tax¡¯ without justification
Kwon Dae Gyung | kwon213@ | 2017-11-13 10:03:40

The government is raising public opinion against tax hikes that are being pursued as an extension of tax revenues as the tax revenue forecast for this year is expected to be the highest in the history of the tax boom. It is pointed out that it is necessary to raise the corporation tax at the time when it is the biggest `boom of the tax revenue` in the past, and to put cold water in the investment and the will to create a job. In particular, the voices of criticism over the fact that the corporate tax recovery is being carried out in the United States and other major countries around the world is also on the rise.

According to the Ministry of Strategy and Finance`s "Financial Trends November" analysis on November 12, the total national tax revenue is expected to be at least KRW 25 trillion more than last year.

According to the government statistics, national tax revenues were KRW 189.5 trillion, up KRW 17 trillion from the previous year, and KRW 18 trillion in September, up KRW 207 trillion. Recently, Chung Kyung-ho, a member of the Free Korean National Party, has put his performance into progression rate for 10 years until August and estimated total tax revenue for this year at KRW 269.1 trillion. This is KRW 26.8 trillion more than the estimated KRW 24.2 trillion this year. Even though it was only KRW 990 billion a month in September, it seems to be over KRW 25 trillion. The problem is not only the national tax, but also the income from the outside and the income from the fund, it is expected that the tax revenue will more than double the total tax revenue of KRW 19.6 trillion last year. Some people look for more than KRW 40 trillion. As a result, the industry, politicians and academics are at the center of the biggest tax boom in the history of the government is not able to convince the reason why it pushes the corporate tax hikes.

According to the revision of the tax law introduced by the government in August, an overvaluation section has been newly established, which imposes 25% of the highest tax rate in excess of KRW 200 billion, in addition to the existing tax rate exceeding 20 billion won and 22%. The National Assembly plans to hold a tax subcommittee on the 13th of this month to deliberate on the revision of the tax law by the end of this month. The government and the ruling party are strongly demanding the revision of the tax law, including tax hikes, but the opposition party lawmakers including the liberal Korean government and the opposition party have strongly opposed it.

The opposition party is in a position that it is not timely to raise corporate tax, which is a big burden on corporations, despite government`s highest tax revenue. Right now, opposition lawmakers are in a position to reconsider from the government`s crappy tax base. "If the tax burden is raised in the tax boom, it will not only put an economic burden on businesses and the public, but it will also hinder the recovery of the economic vitality," said Cho Kyung-ho.

Economic research institutes, as well as inside and outside the government, are strengthening the logic of opposing the rise in corporate tax rates. Cho Kyung-yeop, a senior research fellow at the Korea Economic Research Institute, said, "If there is a gap in the tax burden from the perspective of the company, it will affect the decision to invest." He added, "The tax hike will be a negative factor in our economy."

Jung-min, a researcher at the Hyundai Economic Research Institute, said, "While the United States is trying to turn the U-turn of its own company overseas through corporate tax cuts, Korea is likely to shrink corporate activities through corporate tax hikes." In addition, a researcher at a national research institute said, "If we raise corporate tax, investment is limited and it will have a negative effect on job creation."

Meanwhile, the ruling party is demanding a corporate tax raise on the grounds that large corporations are not able to accumulate excessive internal reserves, reduce the effects of falls due to tax cuts, and have lower effective tax rates than other countries.

By Kwon Dae Gyung & Kim Min Soo kwon213@


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