The three main presidential candidates’ tax policies are taking the center stage as they seek ways to improve the government budget and meet growing welfare demand.

The three rivals have pledged wider state-funded welfare though they have until recently been mostly silent on how to fund it.

Businesses and conservative commentators have criticized them for populist pledges that would hurt growth and investors’ confidence.

While the three share the view that the government’s tax revenue needs to be increased, each candidate is taking a different approach to addressing the issue.

The conservative Saenuri Party’s Park Geun-hye party is reported to be leaning toward raising the value added tax and increasing the tax burden shouldered by high income groups.

The plans for raising the VAT, however, are likely to meet resistance and criticism as an increase would affect the public regardless of income level. VAT accounts for about 27 percent of the government’s tax revenue.

According to reports, the Saenuri Party is considering widening the top income tax bracket to include those with more than 200 million won ($184,000) annual income. At present, the top bracket includes those with 300 million won or more annual income and imposes 38 percent tax.

The Democratic United Party’s Moon Jae-in’s policies overlap with those of Park with regards to levying heavier taxes on high income groups.

Earlier this month, Moon said that he would establish a new tax bracket for the top income group, while the DUP has adopted plans to expand the top bracket to those with 150 million won or more annual income as the official party policy.

In addition, Moon plans to increase the maximum corporate tax rate to 25 percent from the current 22 percent.

Moon’s campaign advisers are also said to be considering reinforcing the comprehensive real estate tax.

The tax was introduced in 2005 under the Roh Moo-hyun administration. Although it was designed to tax those who hold a significant amount of real estate, it came under fire for levying large taxes even on those who do not have regular income.

Independent Ahn Cheol-soo has suggested a three-step plan to increase tax revenues.

According to Ahn’s plans, a tax increase would be the final measure that needs to be implemented “with the agreement of the public.”

For initial measures, the independent candidate and his advisors are hoping to raise the resources necessary to fund welfare programs by cutting government spending and tax exemption measures. Ahn’s measures also include stepping up anti-tax evasion measures and giving priority to welfare projects in allocating the budget.

An agreement is emerging over a tax on short-term foreign exchange transactions at least between the Saenuri and the DUP.

In a recent radio interview, the chief of an economic committee within Park’s campaign, Kim Kwang-doo, suggested that the Tobin tax, which applies to short term foreign exchange transactions, should be considered as a measure to regulate speculative foreign exchange transactions.

Moon’s campaign spokesman Park Gwang-on welcomed the proposal.

“Moon Jae-in’s camp is also considering the Tobin tax, it is also an issue being reviewed in developed nations,” Park said.

He added that there maybe other issues regarding economic democratization on which the ruling and opposition parties can agree, and called for a two- or three-way discussion between the economic policy advisers of the three candidates.

The plans for raising taxes, however, are already meeting strong resistance from the country’s business community.

“Corporate taxes and income taxes should not be raised to secure finances in order to expand the welfare system,” leaders of provincial Korean Chamber of Commerce and Industry chapters said in a statement on Thursday.

The business leaders warned that raising taxes will lead to a fall in corporate spending and private consumption, which in turn will further burden the economy.

By Choi He-suk  (cheesuk@heraldcorp.com)