Posted August. 30, 2008 03:26,
Tax cuts are expected to be high on the agenda in the National Assembly, with both the ruling and main opposition parties presenting their plans to cut taxes.
The ruling Grand National Party, which had pledged tax cuts in both the presidential election and the general elections, presented Thursday and Friday plans to cut income and corporate taxes in an officials meeting in Cheonan, South Chungcheong Province.
The main opposition Democratic Party also adopted cuts in value added tax as a policy initiative Friday in a workshop in Hongcheon, Gangwon Province.
Both parties will push to sign into law their own tax cut bills in the regular National Assembly session in September.
The ruling partys tax cut plan aims to help families and businesses, while that of the main opposition party seeks to assist the middle and working classes.
The ruling party will submit a set of revision bills to reduce the maximum corporate tax rate from 25 percent to 20 percent and the minimum rate to 10 percent from 13 percent by 2010. It also wants to cut the income tax to six to 33 percent from eight to 35 percent by the same year.
The reduction in corporate taxes will increase business investment while the income tax cut will boost consumption by raising disposable incomes, the party said.
Chief party policymaker Lim Tae-hee said, We will revamp taxes on education, healthcare and the oil sector to relieve the burden of low-income households.
The Democratic Party, seeking to turn itself into a party of policymaking after long opposing tax cuts for fear of lower tax revenue, is urging cuts in value added taxes.
In the workshop, the main opposition party agreed to reduce the value added tax to seven percent from 10 percent by the end of next year. Supreme council member Kim Jin-pyo said, The VAT reduction will reduce inflation 2.7 percent on average, easing the burden of the working and middle classes.
The party said the passage of its bill will reduce taxes worth 12 trillion won by the end of next year.
It will also expand tax deductions on housing rents for working class people without homes and decrease the minimum corporate tax rates for small and medium-size companies from 10 percent to five percent.
Fears are growing, however, that the passage of both parties tax revision bills will lead to a revenue reduction of 30 trillion to 40 trillion won, resulting in a budget deficit.