Tried to Lower Beer and Takju Tax Increase Rate... Democratic Party Shouted "Oppose"

Beer tax increased by 30.5 won, Takju by 1.5 won
Flexible tax rates of 50~150% planned due to inflation
Opposition in National Assembly narrows range to 70~130%

A citizen is choosing beer at a large supermarket in downtown Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Sejong=Reporter Song Seung-seop] It has been confirmed that the Democratic Party of Korea opposed the government’s policy last year to minimize the tax rates applied to beer and Makgeolli. Recently, party leader Lee Jae-myung pointed out that the government’s increase in beer and Takju taxes is causing hardship for ordinary people, but due to opposition from his own party members, the public ends up paying more taxes.

According to the Ministry of Economy and Finance on the 22nd, the tax rates on beer and Takju to be shipped from April will increase. The beer tax will rise by 30.5 KRW per liter to 885.7 KRW, and the Takju tax will increase by 1.5 KRW to 44.4 KRW. The tax rate reflects 3.57%, which is 70% of the consumer price inflation rate of 5.1%.

The volume-based tax system applied to beer and Takju is linked to inflation, so the tax increases in line with the price level. Volume-based tax means a tax imposed based on volume or quantity. Unlike fixed-price taxes applied to items like soju and wine, where tax automatically increases with the price, volume-based taxes are fixed per quantity and adjusted annually according to inflation.

However, starting this year, the ‘elastic adjustment system’ will be implemented for beer and Takju under the revised Liquor Tax Act, determining the tax rate within 70% to 130% of inflation. Originally, the tax would have increased by 100% of the 5.1% inflation rate, but considering the high inflation situation, only 70% of the inflation rate was applied.

The opposition party argues that the government’s increase in beer and Takju taxes exacerbates the hardship of ordinary people. On the 20th, Leader Lee said, “The Yoon Seok-yeol government is raising taxes on Makgeolli and beer, which are popular among ordinary people, while consecutively lowering corporate taxes for large conglomerates and inheritance taxes on stocks,” adding, “It seems the Yoon administration is squeezing ordinary people while lavishly giving to the ultra-rich.”

Parliamentary Opposition Narrows Elastic Tax Rate from 50~150% to 70~130%

However, Democratic Party lawmakers opposed the government’s plan to adjust the tax rate to 50% of inflation. The government initially planned to set the elastic tax adjustment range between 50% and 150%, but due to opposition from opposition party lawmakers at the National Assembly’s Planning and Finance Committee tax subcommittee meeting on November 30 last year, the adjustment range was narrowed to 70% to 130%.

Democratic Party lawmaker Shin Dong-geun said, “It seems the government is pushing this under the pretext of inflation control,” and criticized, “I fundamentally oppose giving excessive discretionary power over the elastic tax rate to the presidential decree.” Lawmaker Yang Kyung-sook also stated, “I oppose it because it violates many aspects of the principle of taxation by law.” Tax imposition and collection must be based on laws enacted by the National Assembly, and the government’s excessive autonomy makes it impossible to support the measure.

There were also predictions that if the elastic adjustment is not implemented, the prices of beer and Takju will rise significantly next year. Democratic Party lawmaker Ko Yong-jin said, “If taxes increase significantly, manufacturers will inevitably pass on the cost to the prices of Takju and beer, which are our popular alcoholic beverages,” and judged, “Ordinary people will have to pay more to drink Takju and beer.” Nevertheless, he argued, “The range of the elastic tax rate is too wide, and it should be reduced.”

In response, Deputy Minister of Economy and Finance Bang Ki-seon explained, “Ultimately, it will affect prices, but since beer and Takju are volume-based taxes linked to inflation, the tax rate increases every year,” adding, “This system was introduced to lower or slow down the tax increase.” The Ministry of Economy and Finance also issued a statement the previous day claiming, 'The tax rate increase on beer and Takju under the tax law enforcement decree is actually for the middle and lower-income classes.'

However, there are criticisms that this explanation is inappropriate given that taxes are rising amid inflation exceeding 5%. Alcohol companies typically raise prices immediately after tax hikes, so the tax increase is expected to be reflected starting in April.

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