Personal Tax to Be Average 2.6 Million Won Next Year

It was estimated that personal tax would be average 2.6 million won per person next year.

Ministry of Finance and Economy announced yesterday that the Korean taxpayers` tax burden would be around 21.8-21.9 percent this year, which is little lower than last year, and would not exceed 22 percent next year.

If there is no change in the taxpayers` tax burden, personal tax is anticipated to increase as the same increase rate of gross domestic product (GDP). If the government`s outlook for economic growth rate of 4 percent is added to 2.51 million won personal tax, which includes the local tax, personal tax is to be 2.6 million won, which is 100,000 won increased.

A Ministry of Finance and Economy official said that ``since this amount of tax, which is a sum of the total amount of personal tax and corporation tax, is divided by the number of population, this is different from the actual amount of tax that people have to pay.``

Meanwhile, Korea Development Institute (KDI) analyzed in its report on `analysis on the major issues and effects of countermeasures of economy` that ``the amount of tax cut that is necessary for a short-term activation of economy is 2-3 trillion won.`` The anticipated amount of tax cut announced by the government on Monday is 1.9 trillion won.

Saying that ``a cut of corporation tax rate has a strength that can minimize the arbitrariness of execution of tax policy compared with the selective deduction of investment tax.`` the KDI report presented a different opinion from the Ministry of Finance and Economy, which did not lower the corporation tax rate in the tax reform bill.

Park Joong-Hyun sanjuck@donga.com