Tax Deduction Proposed for Families with Newborns or Multiple Children

The government and the Uri Party agreed on policies to expand government spending as well as to reduce taxes partially to ease the economy. The details will be announced in the party’s panel discussion on economic policies to be held today in the National Assembly.

Speaking yesterday at a press conference, Uri Party floor leader Chun Jung-bae said, “We are considering tax cuts to stimulate business activities and to encourage consumer spending. Aggressive fiscal policy and tax deduction will be suggested at the party level.”

Lee Bu-young, the Uri Party chairman, also said in a recent interview with Dong-A Ilbo that he “will ask the government to pay attention to issues such as tax deductions and oil price hikes. The overall thrust of our economic policy will be expanding fiscal expenditures, but we are also considering measures such as tax cuts for businesses suffering from high oil prices.”

The party and the government are planning to expand tax cuts for businesses on their research and development expenditures, and to establish a new tax deduction for families with newborns or multiple children to lighten ordinary workers’ tax burden.

An Uri Party official said, “We are in the process of making the bill along the line to cut taxes on R&D expenditures and are now elaborating on benefits to offer to small and mid-sized enterprises.”

Another official said, “Income tax cuts currently being considered are 500,000 won for a family with a newborn and 500,000 won per child for a family with three or more children.”

However, it is known that the Uri Party decided not to consider a general cut of current tax rates, which range from 9 to 36 percent, as suggested by the Grand National Party, saying it causes too much decrease in revenue and doesn’t help ordinary households.

The Uri Party plans to announce its official policy to revive the economy in a panel discussion today. Deputy Prime Minister and Minister of Finance and Economy Lee Hun-jai, Korea Development Institute chief Kim Joong-soo, former chairman of the American Chamber of Commerce in Korea Jeffrey Jones, Korea Employers Federation chairman Lee Soo-young, and other economic figures as well as lawmakers will participate in this discussion.

Hoon Lee dreamland@donga.com