Deputy Prime Minister and Finance Minister Hyun Oh-seok said that the government will not make any changes to its welfare policy following the readjustment of its tax code revision.
The administration’s 135 trillion won ($120.6 billion) budget for welfare expansion will not be reduced, and it will stick to the plan it pledged for the lower and middle class, the finance minister stressed to reporters after an economic-related meeting on Wednesday.
The ministry’s latest modification of the revision, which raised the annual income cap from 34.5 million won to 55 million won for tax hikes, would most likely lead to lower tax revenue, and thus fewer resources to finance the growing welfare costs.
This has raised speculation that the government will inevitably have to readjust its welfare budget to line up with its tax revenue expectations.
However, Finance Minister Hyun downplayed this scenario, saying the government “will not face any setbacks” from the tax overhaul proposal to implementing its welfare policy.
“A rapid economic recovery would be the way to cover tax revenue,” he said.
Additionally, the Finance Ministry plans to strengthen tax probes into high-income professionals such as real estate agents and self-employed lawyers and doctors to increase its tax collection.
It will discuss the matter closely with the National Tax Service to expand investigations into tax avoidance and money laundering by such professionals, Hyun noted.
He reiterated that there would not be any “direct tax increase” on the working class, and that talks are underway with lawmakers regarding the possibility of raising corporate taxes.
The government initially introduced a proposal to raise the income taxes of workers with an annual salary of over 34.5 million won, which drew harsh criticism from political circles and the public for overburdening the middle class.
President Park Geun-hye ordered her economic team to redraw the tax proposal from scratch, prompting the Finance Ministry to raise the income line dividing the top and middle income earners to 55 million won.
By Park Hyong-ki (firstname.lastname@example.org