"Bangtan National Assembly" vs "Politics of Fear"... The 'Tax Law War' Engulfed in Political Strife

Budget Bill Misses Legal Deadline Next Year
Regular National Assembly Session This Year Also Fails to Pass
Financial Investment Tax Implementation on January 1 Next Year Uncertain

The Tax Subcommittee of the National Assembly's Strategy and Finance Committee has not been able to convene on the 30th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Hyunju Lee] It is important to know where taxes are spent, but it is also important to know how taxes are paid. Since taxes are withheld from salaries, people sometimes forget that they are paying taxes, but most of the time, taxes are paid when receiving a salary or purchasing goods. The taxes paid by the people form the basis of government revenue and budget.

Because taxes change according to the principle of legality in taxation, the role of the National Assembly is crucial. This is why attention should be paid to the review of the 'budget-related bills' along with the review of next year's budget proposal. The tax amount to be paid next year depends on how the tax revision bills and budget-related bills submitted by the Ministry of Economy and Finance are decided during the annual budget process.

One representative example is the 'financial investment income tax,' a type of income tax. The financial investment income tax is already a highly contentious issue between the ruling and opposition parties. The People Power Party and the government are advocating for a two-year postponement of the tax, while the Democratic Party opposes it.

With less than a month left until January 1 of next year, what has happened to these bills? Legally, a conclusion should have already been reached. According to Article 85 of the National Assembly Advancement Act, the review of budget-related bills should have been completed by November 30. However, the National Assembly has yet to finish discussions. This is because the Tax Subcommittee of the Planning and Finance Committee, which is responsible for discussing the bills, was slow to convene and has been unable to hold proper meetings due to disagreements between the ruling and opposition parties.

Deputy Prime Minister for Economy Choo Kyung-ho attended the full meeting of the Planning and Finance Committee held at the National Assembly on the 1st and is seen talking with First Vice Minister Bang Gi-seon before the meeting started. Photo by Yoon Dong-joo doso7@

The Tax Subcommittee of the Planning and Finance Committee faced difficulties from the start. Various laws are assigned to different standing committees, and tax-related bills are handled by the Tax Subcommittee within the Planning and Finance Committee. The subcommittee's composition is decided through an agreement between the ruling and opposition party secretaries of the committee, but from the beginning, friction arose between Ryu Seong-geol, the ruling party secretary from the People Power Party, and Shin Dong-geun, the opposition party secretary from the Democratic Party.

"The chairperson of the Budget and Accounts Fund Review Subcommittee should naturally be from the ruling party. Since the 16th National Assembly, the ruling party has held this position." (Ryu Seong-geol, Secretary)

"We thought the chairpersonship of the Budget and Accounts Subcommittee would be given to us, so this is unexpected. The ruling party should be more accommodating." (Shin Dong-geun, Secretary)

Eventually, the Planning and Finance Committee agreed to create an additional Petition Review Subcommittee, dividing the subcommittees into two each, and formed the subcommittees on the 16th of last month, the latest formation since the second half of the National Assembly session began.

Just when the review of budget-related bills was about to start, the opposition party raised the issue that other bills also needed to be reviewed during the regular session. The Democratic Party requested that bills, including the 'Basic Act on Social Economy' and others that lawmakers wanted to discuss, be submitted. After a week of intense negotiations between the ruling and opposition parties, it was decided that the Basic Act on Social Economy would be submitted as an agenda item after the budget review, and other bills were submitted at the plenary session on the 1st of this month.

Once the Tax Subcommittee began in earnest, it seems urgency set in. When the legal deadline of November 30 arrived, the subcommittee passed some bills without proper review. Although there were no disagreements between the parties, the review was effectively rushed. These included bills reflecting sunset clauses in the Restriction of Special Taxation Act.

Shin Dong-geun, opposition party secretary of the Tax Subcommittee, Ko Yong-jin, member of the Democratic Party of Korea, and Jang Hye-young, member of the Justice Party, are talking before the start of the National Assembly Tax Subcommittee on the 28th. Photo by Yoon Dong-joo doso7@

Jang Hye-young, a Justice Party lawmaker, pointed out, "The Tax Subcommittee did not even have a single reading, and about 45 items of the Restriction of Special Taxation Act were bundled together and passed without asking for any objections, based on an agreement between the two parties." She added, "The Tax Subcommittee exists to review how the state will use taxes for specific purposes, but passing bills in bulk without reviewing each one individually denies the very reason for the existence of the National Assembly." She criticized, "The Tax Subcommittee is handing out billions and trillions of won to companies recklessly. Honestly, the Planning and Finance Committee should take responsibility and apologize for repeatedly failing to properly exercise the authority granted by law and for rushing through the process."

Because the legal deadline was missed, the official authority of the standing committee to review the bills was lost. The day after November 30, the bills were automatically referred to the plenary session according to the National Assembly Act, and due to the failure of agreement between the ruling and opposition parties, the legal deadline of December 2 was also missed. Even by the last day of the regular session on the 9th, the parties had reached some agreements on contentious issues such as the comprehensive real estate tax, but the financial investment income tax remained unresolved.

The intense confrontation between the ruling and opposition parties until the end of this year stems from the political structure of a minority ruling party in the National Assembly and the all-out prosecution investigations into the previous administration following the regime change. Since the prosecution investigations targeting former President Moon Jae-in and Democratic Party leader Lee Jae-myung are not matters for negotiation or compromise, the confrontation has become extreme, unlike usual negotiations that involve give-and-take.

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