[Income Tax Debate] "Let's Fix the 15-Year-Old Income Tax" Competition for Legislative Leadership

Proposals to Ease Tax Burden on Middle and Low-Income Groups
Including Increased Tax Brackets and Reduced Rates for Income Tax Law Amendments

[Asia Economy Sejong=Reporter Kim Hyewon] As the government pushes for a 15-year-old income tax reform, it has emerged as a hot issue in the first tax law amendment of the new administration, which will be unveiled on the 21st. In particular, the government is expected to revise the income tax to ease the tax burden on middle- and low-income earners, excluding high-income groups, leading to a competition for legislative leadership between ruling and opposition parties in the National Assembly.

According to related ministries and the National Assembly on the 14th, the Ministry of Economy and Finance, with the cooperation of the National Tax Service, is conducting a tax simulation assuming an increase in the income tax base brackets and a reduction in tax rates. This involves adjusting the taxable income brackets, which is the amount after deducting various exemptions from earned income, upward in line with the consumer price inflation rate and lowering the tax rates to assess how much the actual tax burden would decrease. On the 11th, during a briefing on the Ministry of Economy and Finance’s work by Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, President Yoon Suk-yeol instructed to "prepare measures to reduce the tax burden on the middle and lower classes struggling in the era of high inflation," which has made the atmosphere within the government regarding income tax reform quite serious. ▶Related article on page 4

Since this requires a bill amendment and the income tax reform focuses on easing the burden on the ‘ordinary people’s wallet,’ the National Assembly’s activities have also become busy. On the 11th, Kang Dae-sik, a member of the People Power Party representing Daegu Dong-gu E district, introduced a partial amendment bill to the Income Tax Act to raise the current taxable income bracket below 100 million won. Then, on the 13th, Go Yong-jin of the Democratic Party proposed an amendment to raise the taxable income bracket below 88 million won and reduce the tax rate by 1 to 2 percentage points. Although there are differences in details such as the extent of the bracket increase and tax rate adjustments, the overall purpose of the amendment, targeting middle- and low-income earners excluding high-income groups, is shared by both ruling and opposition parties. More specific discussions on income tax reform are expected at the party-government council meeting scheduled for the 18th, ahead of the tax law amendment announcement.

If the Income Tax Act is amended as proposed by Representative Go, with simultaneous increases in taxable income brackets and reductions in tax rates, the income tax for ordinary people and the middle class will decrease by about 15 to 20%. For example, if a wage earner in the 46 million won taxable income bracket, which accounts for the majority of wage earners, paid 5.82 million won in taxes last year under the progressive tax rate of 15%, the revised bill would calculate the tax at 4.78 million won, reducing income tax by about 1 million won. For example, if a wage earner in the 46 million won taxable income bracket, which accounts for the majority of wage earners, paid 5.82 million won in taxes last year under the progressive tax rate of 15%, the revised bill would calculate the tax at 4.78 million won, reducing income tax by about 1 million won.

This content was produced with the assistance of AI translation services.