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56 Percent in Wage Income Taxes Over-Collected Last Year

56 Percent in Wage Income Taxes Over-Collected Last Year

Posted September. 06, 2001 09:37,   


Despite the government`s announcement that it consistently lowered wage income taxes to benefit middle and lower income bracket workers, it recently reported that the government received additional 56 percent wage income taxes last year than budgeted.

In its report to the National Assembly, the Ministry of Finance and Economy reported yesterday that the government collected 6.5188 trillion won in income taxes from wage workers last year, or 2.3397 trillion won (56 percent) more than the budget of 4.1791 trillion won.

Previously, the government had announced that wage income taxes would be slashed by 1.2 trillion won through expanded deductions on items such as overall wage income and pension insurance premiums. However, the increase in tax revenues in 2000 amounted to 1.5806 trillion more than in 1999, far outweighing the effects of the deduction measures.

As a result, the wage income tax reduction policy is being questioned as having had no real effect, even though the government claimed that it slashed the tax budget by at least 1 trillion won every year for the last three years.

Meanwhile, the self-employed and business owners did end up paying 8.6 percent less in taxes than the original budget on their business operating and dividend incomes. Consequently, it was only the salaried working population that collectively ended up paying more taxes and was stuck with a thin wallet last year.

``Had we not enacted the reductions, even more taxes would have been collected.`` explained a MOFE official. ``The reason that more wage income taxes were collected was that profit-sharing plans and merit-based salary programs became more widespread last year. And because there were more high wage earning individuals last year, we ended up collecting more taxes than anticipated.``

Park Joong-Hyun sanjuck@donga.com