Park Pledges to Reduce Income Tax

Presidential hopeful Park Geun-hye Tuesday announced a tax cut plan for salary workers and small and medium-sized companies.

At a press conference held in her campaign office in Yeouido, the former Grand National Party leader disclosed the tax cut policy plan. According to her plan, she will introduce an inflation-tied income tax, reduce vehicle fuel taxes by 10%, and lower the corporate tax rate.

If the new income tax plan is implemented, the income scale for different tax rates will be changed according to inflation. For example, people who earn 10 million won or less currently pay 8% of their income for tax. Those who earn between 10 million won and 40 million won pay 17% of tax. If inflation grows 10%, the income range for the 8% tax rate will be modified to 11 million won or less. Likewise, when prices go up by 10%, the income scale for the 17% tax rate will be changed to between 11 million won and 44 million won.

“Under the new plan, ordinary citizens will not have to pay more taxes than the real increase in income,” said Park.

In addition, she pledged that she will exempt the special consumption tax on the usage of LPG for taxi drivers and small transport business owners. Moreover, the transportation tax on vehicle fuel and the special consumption tax on heating oil will be cut by 10% according to her plan.

Other pledges included a tax deduction of up to 30 million won on the mortgage loan of single house owners. She also promised to increase the tax deduction on education expenses for preschool, primary and junior high school students from 2 million won to 4 million won.

Currently, the corporate tax standard is 13% for the income range of 100 million won and lower, and 25% for more than 100 million won. To enhance small and medium businesses’ investment capacity, Park said she will change the standard to 10% for 200 million won and 25% for more than 200 million won.

“This tax cut policy will reduce the tax income of about 6 trillion won. But we can fill the gap by reducing excess government budget, removing redundant poor performing projects and recollecting government funds,” said Park.

myzodan@donga.com