Investigating Measures to Increase Education and Medical Expenditure Through Raising Income Tax Rate

The government is investigating a measure that will increase the government spending for education expense and medical insurance. ``During these economically challenging times there has been some increase in unequal distribution of tax burdens on different levels of society. We are investigating ways to alleviate the tax burdens for middle and lower income workers through measures such as raising tax rates,`` an officer from the Financial and Economic Committee announced on the 29th. ``Reforming the tax regulations in order to raise the tax rates that apply toward education and medical insurance coverage is the most effective measure. Since we are presently dealing with general tax revenue problems for this tax year, there is a high possibility that the new measures will go in effect by the end of next tax year,`` the officer said.

Despite the planned resolution to decrease tax exemptions and special benefits in the tax system policy, the Financial and Economic Committee will maintain the current policies for the time being.

Also the Committee has decided to wait and further examine possible timelines for the comprehensive report of how tax cuts may disrupt necessary conditions for a balanced budget and whether current legislation for inheritance tax and gift donations may prove unconstitutional.

The current expenditure for education allows for per person up to 1, 000, 000 won for pre-schoolers, 1, 500, 000 won for grade, middle, and high schoolers, and 3, 000, 000 won for college students in income tax benefits. The medical coverage rate exceeds 3 percent of the average annual income amounting up to 30, 000, 000 won and security insurance amounts up to 700, 000 won.

Park Joong-Hyun sanjuck@donga.com