Rival parties criticize administration’s tax code overhaul proposal

There is mounting criticism from taxpayers that the administration’s new tax code proposal for next year is designed to squeeze revenues from middle-class salaried workers. Both the ruling and opposition parties also criticized the proposed tax code overhaul. The presidential office Cheong Wa Dae attempted to tamp down the criticism Friday in consideration of the severity of the issue, only to fuel the controversy by saying that the proposal would “pluck only a few goose feathers.”

Choi Kyung-hwan, the floor leader of the ruling Saenuri Party, said during a major party officials’ meeting Friday that the tax code overhaul proposal was “positive” in that it would increase fairness among various income brackets and expand the tax base by reducing tax support for large corporations. However, he stressed that the proposal should be “corrected” if it excessively increases tax burdens on salaried workers, whose incomes are transparently exposed. Choi indicated that while he agreed to the major points of the proposal, he thought it was inappropriate to excessively increase tax burdens on salaried workers.

The ruling party criticized the proposal presumably in consideration of the forecast that the top 28 percent of all salaried workers earning nearly 34.5 million won (31,039 U.S. dollars) or more in annual salary would have to pay more taxes. As most of them are white-collar workers who react sensitively to taxes and explicitly voice political opinions, they would likely withdraw their support for by-elections in this coming October and local elections in June 2014. Therefore, the ruling party is considering ways to increase the rate of income deductions on medical and education expenses and maintain some benefits for salaried workers.

The main opposition Democratic Party has also launched an all-out political offensive on the government, calling the proposal a “tax bomb on the middle class.” Kim Han-gil, the party’s chairman, said during the party`s leadership meeting on Friday that the proposal was “pushing the middle class to the verge” and pledged that his party would not let it pass the National Assembly untouched. The party also plans to take the taxation issue as an opportunity to turn the political table amid controversies over the state spy agency’s alleged intervention in last year’s presidential election.

Adding power to the opposition party is the fact that the parliamentary Strategy and Finance Committee, which deliberates the tax code overhaul proposal, consists of the same number of lawmakers from the ruling and opposition parties, making it impossible for the proposal to pass without opposition parties’ consent. The Democratic Party opposes the proposed reduction of the income deduction rate on credit card uses and replacing income deductions on education and medical spending with tax reduction, which is expected to increase tax burdens on salaried workers. Kim Hyun-mee, the executive secretary in the Strategy and Finance Committee, said that the panel has an intention to discuss the proposal as it is. The Democratic Party plans to submit its own tax code revision proposal that would lower the income bracket for the highest tax rate from the current 300 million won (270,000 dollars) to 150 million won (135,000 dollars).