Roh Opposes Corporate Tax Cut

President Roh Moo-hyun made it clear Mar.5, “Corporate tax cut should be carried out in a cautious manner, considering the fact that it would influence the financial structure and the economy as a whole. The principle of taxation equity should be guaranteed at any cost.”

The president who presided over a meeting with senior presidential secretaries and aides said, “A fuss over corporate tax cut might be caused by false media reports of the Finance and Economy ministry’s position.”

“It might be wrong to talk about individual taxation system and tax item for corporate tax cut. Therefore it might be desirable to discuss the matter as a mid and long term plan,” presidential spokesperson Song Kyung-hee quoted the President as telling to the participants.

President Roh’s remark can be interpreted as a move to correct the misapprehension that corporate tax cut continuously mentioned by Finance and Economy Minister Kim Jyn-pyo since the inauguration of the new government is designed to offer favors only to big companies. In practice, however, the president’s remark clearly showed that he wants to put brakes on the finance ministry’s move to cut corporate income tax.

Early in the day, Prime Minister for Finance and Economy Kim said at the cabinet meeting, “Corporate tax cut is a necessary move to facilitate business investments.” Construction and Transportation Minister Choi Jong-chan echoed the Prime Minister’s idea of cutting corporate tax by citing Singapore as an example.

“We will lower the corporate tax rate, monitoring tax payments made by self-employed and small businesses that understate their earnings,” said Deputy Prime Minister Kim in a radio interview. “We plan to cut the corporate tax to a same level with those in competitor countries.”

In the meantime, civic groups like People’s Solidarity for Participatory Democracy opposed to the government’s move, calling it unilaterally favorable to large conglomerates.

The civic group argued Monday in the statement that it is not proper to cut the corporate tax without a firm determination to establish a taxation system, calculation, and countermeasure. “Tax cut was the matter that President Roh also opposed due to the fiscal burden.”

President Roh had said in his presidential campaign last year, “It is not time to lower the corporate tax,” stressing that there was a need to lower the tax rate for medium-sized companies.

Young-Hae Choi yhchoi65@donga.com