Gov`t Considers 2 Percent-Point Cut in Corporation Tax For a Limited Time

A controversy over the reduction of corporation tax appears to catch on fire as the Grand National Party (GNP) submitted a proposal for 2 percent-point cut in the corporation tax and the Ministry of Finance and Economy is considering measures to cut the corporation tax for a limited period.

A top official of the Ministry of Finance and Economy said on Oct. 17, ``The government already submitted the revision of the current tax system to the National Assembly on Oct. 2. This case will be determined at the National Assembly as the GNP also submitted a bill of revised corporation tax system to the National Assembly in a form of legislation introduced by a member of assembly.``

This official went on to say, ``The government is considering prudentially to cut the current 28 percent corporation tax on companies with the tax basis of 100 million won income and above and 16 percent on companies with less 100 million won income to 26 and 14 percent for a limited period, marking 2 percent point cut.``

If this bill is passed, the tax revenue will be reduced by 1.4 trillion won. However, it has not been concluded immediately because it is not easy to raise the rate, which once has gone down.

Ro Hyung-Chul, the director of the Ministry of Finance and Economy Taxation Policy, said, ``While the opposition party proposes the reduction of tax as an economy-invigorating policy, the ruling party is carrying out a policy of expanding government expenditure.`` and explained, ``When the revision of taxation system was being prepared, many people voiced that the current corporation tax rates should remain the same since they are still lower in comparison with the advanced countries.``

The GNP has submitted the bill of revised tax system, including 2 percent cut in corporation tax, to the National Assembly at Rep. Kim Man-Je` proposal.

yhchoi65@donga.com