Assemblyman Kim Hoe-jae, "According to Yejongcheo's estimate, the current government's corporate tax rate cut results in about 15 trillion won in tax cuts for the wealthy"

Yejungcheo: "Tax revenue effect from corporate tax rate reduction estimated at total ?14.8 trillion KRW from 2023 to 2026" ... 2.2 times the Ministry of Economy and Finance's estimate of 6.8 trillion KRW

Kim Hoejae: "Ministry of Economy and Finance distorts corporate tax reduction amount for wealthy tax cuts ... Livelihood budget must be restored"

[Yeosu=Asia Economy Honam Reporting Headquarters Reporter Choi Cheol-hoon] It has been revealed that the tax revenue loss due to the current government's corporate tax rate cuts amounts to approximately 15 trillion won over four years.

This figure is 2.2 times the 6.8 trillion won reduction in corporate tax revenue announced by the government.

There are criticisms that the government is distorting the actual tax revenue reduction to avoid criticism of tax cuts favoring the wealthy.

According to the "2023 and Mid-term National Tax Revenue Outlook" report published on the 26th by the National Assembly Budget Office (NABO), the tax revenue loss caused by the Yoon Seok-yeol administration's corporate tax rate cuts is expected to reach a total of 14.8 trillion won over four years from 2023 to 2026.

This amount is 2.2 times the 6.8 trillion won corporate tax revenue loss announced by the Ministry of Economy and Finance as part of the tax reform plan.

NABO estimated the tax revenue loss based on the cumulative method, which sums the annual changes in tax revenue compared to the base year 2022. The cumulative method is considered a way to intuitively confirm the tax revenue reduction.

On the other hand, the Ministry of Economy and Finance estimated the tax revenue loss using the "net method," which sums the tax revenue decreases from this year to next year and from next year to the following year.

As a result, the actual tax revenue reduction compared to the base year (this year) tends to appear smaller.

NABO estimated the tax revenue effect of the corporate tax rate cuts to be about -400 billion won in 2023 and -5 trillion won in 2026, totaling approximately -14.8 trillion won.

NABO stated, "With the expansion of domestic and international economic uncertainties limiting the growth of corporate operating performance, the tax law amendments including corporate tax rate cuts are expected to impact future tax revenue reductions."

Additionally, NABO estimated that the tax revenue under the Yoon Seok-yeol administration's tax reform plan will reach 56.4 trillion won from 2023 to 2026 based on the cumulative method.

There are criticisms that the large-scale tax cuts contradict the Yoon Seok-yeol administration's fiscal soundness policy and concerns that the government’s hands and feet may be tied due to tax cuts favoring the wealthy amid economic downturn clouds.

Assemblyman Kim Hoe-jae said, "I suspect that the Ministry of Economy and Finance is distorting the corporate tax reduction amount to avoid criticism of tax cuts favoring the wealthy," adding, "Using tens of trillions of won in government funds for tax cuts benefiting the wealthy is a declaration of giving up on the lives of the people."

He continued, "At a critical time when the possibility of an economic crisis is increasing due to high interest rates, high exchange rates, and high inflation, the government must play a more active role," and said, "During the National Assembly budget review process, we will definitely restore budgets for local currency, youth support projects such as the Youth Tomorrow Employment Deduction, and senior job budgets to support the people's livelihood economy."

Yeosu=Asia Economy Honam Reporting Headquarters Reporter Choi Cheol-hoon hss79@asiae.co.kr

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