Answering Roh’s Challenge, GNP Proposes 8.9 Trillion Won Tax Cut

In the wake of its announcement of a war against taxes, the Grand National Party (GNP) held a meeting on Monday headed by its leader Park Geun-hye, for countermeasures against the government’s tax policies.

The party came up with a tax-reduction bill that would cut taxes by about 8.91 trillion won, or 620,000 won per household.

The GNP’s action came after a month when President Roh Moo-hyun, in his meeting with Park on September 7, expressed negative opinions when he was confronted with the argument to cut taxes, saying that he would need a complete list of taxes that could be reduced.

The opposition party suggested that the government reduce the income tax from the current 8-35 percent to 6-33 percent to ease the burden of ordinary taxpayers, which would lead to a tax reduction of about 2.74 trillion won.

In addition, the GNP also argued that the range of the taxation standard of the corporation tax should be changed as well. The party suggested imposing a 10 percent tax on companies with a profit of 200 million won or less (the tax is currently 13 percent on those with profits of 100 million won or less), while imposing a 25 percent tax on those with the profit of more than 200 million won (the tax is currently 25 percent on those with the profit of more than 100 million won). Or the GNP suggested a three-percent reduction on some tax rates. This, the GNP believes, will reduce the tax reduction of 890.4 billion won, encouraging investment in small and medium sized companies.

The transportation and special excise taxes on gas are also on the list, which the GNP suggests should be reduced by 10 percent respectively (2.2326 trillion won), and will relieve the burden of corporation and private consumers.

The list includes exempting taxies from LPG special excise taxation, exempting the vehicles of the disabled from the LPG value-added tax, categorizing corporate donations for poorly-fed children as a loss, and exempting small cars, utility vehicles, and trucks from the acquisition and registration taxes. This, the GNP believes, will stabilize the living of ordinary people.

In the meantime, the opposition party made clear that it is strongly against the government’s reform bill on five taxes, which includes an increase in the soju tax and the LNG special excise tax, and the decrease in the income deduction rate for credit card users (from the current 20 percent to 15 percent).

Yong-Gwan Jung yongari@donga.com