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‘Gov’t to Encourage High Earners to Spend More in Korea’

‘Gov’t to Encourage High Earners to Spend More in Korea’

Posted July. 29, 2008 03:18,   


Strategy and Finance Minister Kang Man-soo said yesterday that the government will encourage high income earners to spend more in the country rather than abroad.

Kang made the comment in response to main opposition Democratic Party lawmaker Choi Cheol-guk, who said taxes on the high-income bracket should remain unchanged while those on the low-income bracket should be cut.

At a meeting of the parliamentary committee for stabilization of the people’s livelihood, Kang said, “Korea’s economic conditions have worsened partially due to a surge in overseas consumption of the high-income bracket. As a result, their consumption has decreased in Korea, thus harming the low-income bracket.

“If different policies are imposed on the rich and the poor, the low-income bracket will ultimately suffer. This has proven in many nations.”

He said the government will try to help the low-income bracket and the unemployed to effectively benefit from government policies.

On ruling party lawmakers who seek to cut the comprehensive real estate tax, he said, “Only Korea imposes such a tax. Tax policies should manage government revenue and redistribute income. If used for other purposes such as controlling real estate speculation, their original functions as well as government policies and authority will be damaged.”

“Nevertheless, given that stabilization of consumer and housing inflation plays a significant role in the people’s daily lives, the government will take a careful approach on tax policy.”

On corporate tax, the minister said, “Korea’s highest corporate tax rate is 25 percent, higher than the average 24.3 percent among member nations of the Organization for Economic Cooperation and Development. All other nations are struggling to lower their corporate tax rates. Given that, we’ll also cut the tax to encourage smaller firms to invest more.”

At a news conference at the National Assembly, ruling party lawmaker and committee chairman Lim Tae-hee said, “Under the biggest goal of real estate market stabilization, we’ll carefully deal with the tax cut. We’ll begin dealing with the comprehensive real estate tax in September and release detailed measures in October.”

“We’ll evaluate whether the tax’s initial goal has been realized and whether it has produced innocent victims. After discussions with the government, we’ll find measures to minimize side effects.”

On the proposed cut in the transfer income tax, Lim said, “In the general elections, we promised to cut the tax. Under the principle of cutting the transfer income tax, we’ll come up with effective measures as soon as possible.”

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