Posted September. 09, 2005 07:43,
The government and the ruling party have agreed to defer an increase in the tax on liquor and a special excise tax on liquefied natural gas (LNG), with which they planned to address tax revenue shortages.
Kim Jong-yull, a member of the National Assembly and the finance and economy committee, said, As many have pointed out that an increase of the liquor tax and a special excise tax on LNG, the government and the ruling party has agreed to hold it back.
Kim said that the government and the party will actively review ways to make up for tax shortages by selling part of the governments quota of the industrial bank instead.
The Ministry of Finance and Economy said in a proposed reform plan published last month that the liquor tax applied to soju and whiskey would increase from 72 percent of the factory price to 90 percent, and that the tax on LNG used for heating by urban citizens would rise from 40 won per kg to 60 won. Under the tax increase plan, the price of a bottle of soju would rise by 100-200 won, and the price of LNG would jump by 1,300 won per household.
The government and the ruling party expects that if 15 percent of their share of the industrial bank was sold at a fair market price, they could secure 880 billion won, which would replace the tax revenue generated (840 billion won) from an increase in the liquor tax and special excise tax on LNG.
However, tax revenue shortages are not just a problem this year. A tax increase seems inevitable after one or two years.