“Isn’t There Too Much Tax Burden?”

A large number of taxes are likely to rise this year, thereby further burdening the population.

The government is intent on restoring a balanced tax system. However, even when considering the administration’s emphasis, there are criticisms that the increased tax burden is too sudden.

On March 6, the Finance Ministry and the Ministry of Planning and Budget put out the estimate that the per capita tax burden will go up from 2,450,000 won last year to 2,700,000 won, a rise of 250,000 won (10.2 percent). The jump is because a number of tax items are bound to rise.

Compared to the growth, in 2004, the increase in per capita tax burden was limited to 50,000 won increase from 2,400,000 won for the previous year. The reason was the sluggish economy and the consequently smaller amount of tax revenue.

At the end of this year, housing-related taxes will rise. To that end, tax papers will be issued for property taxes and consolidated real estate taxes, and every household with three houses will have to pay a heavier capital gains tax. Other measures are expected to follow. Though prices of diesel fuel rest at 70 percent of those of gasoline, the prices will increase by 60 to 70 won per liter from July on, following the government’s “second-stage fuel tax reform.”

In the case of seven- to 10-seat minivans and SUVs, these types of vehicles will be newly classified into the passenger car category. The auto tax on Carnival, with its 2902cc engine, will nearly double from 65,000 won last year to 127,110 won this year. As many as 2.2 million cars with seven- to 10- seats will be affected by a tax increase.

With the issuance of cash receipts, the self-employed will have to shoulder more value-added taxes from July onwards. The growth in VAT is certain to be followed by an increase in income tax on this year’s income in May 2006.

The Finance Ministry plans to shift the taxation system from the linear one used at present to a completely comprehensive one. Therefore, a heavier tax burden is likely.

For example, last year, the complete comprehensive principle began being applied to inheritance and donation taxes. Consequently, the authorities gained 1.7 trillion won, a sum that was 42.9 percent more than their target (which took into account the budget proposal).

The Ministry of Health and Welfare is working on another 500-won increase in cigarette prices, albeit not a tax, to boost its health promotion fund.