[Issue] [January 2016] In Focus_Economy : Who do the tax reforms help?

Who do the tax reforms help?

Choi Ye-Ji

Staff, Economic Policy Team


several years, government tax policy has prevented fair taxation. Corporate tax
cuts and tobacco tax increases are one of many examples. Tax policy has not led
to a redistribution of wealth that helped income inequality, rather it has triggered
polarization of private companies and households. In spite of this gloomy
reality, the newly passed tax bill in 2015 is making the situation worse.

On August
6th, the government amended the 2015 tax bill, aiming to improve the economy
and public welfare situation through fairer taxation that would lead to growth
and reduce the employment barrier for youth. However, the tax bill’s glaring
shortcoming are the numerous tax benefits in the form of tax cuts for those in
the higher income brackets.

Tax law is
so difficult that the general public cannot assess the seriousness of the
issue. For that reason, CCEJ held an evaluation session with a tax specialist
and submitted its findings in a report.


시사포커스6_세법개정안 심의하는 국회.jpg

ⓒ Yonhap News

No fair taxation, only tax cuts for the rich

Kim Yu-Chan evaluated the amended 2015 tax bill and said there is much room for
improvement in terms of achieving a fair taxation. He added that the tax bill
has introduced poorly judged tax cuts under the guise of economic
revitalization and pointed out that the problems of the tax system with regard
to capital gains.

A number
of bills were passed on the 3rd of December last year. Among those bills, one
sought to bolster the hiring of youth by new start-up companies. Anyone
donating to start-ups could claim a tax cut.

it has taken 48 years for tax policy to change in regards to the income of
individual religious leaders, it is still an imperfect system, with a grace
period lasting until 2018. Taxation on income gained from leases is also not
included in the bill. Normalization of corporate tax is still pending. In
addition, the government has revoked the individual consumption tax of items
such as cameras and perfumes, which have exacerbated the flaws of the value
added tax system. In foreign countries, perfume is a weighted, non-essential
good among value-added tax items.


Who is
helped by the tax revision? Earned income from work is the only way the general
public accumulates wealth. Yet these tax revisions loosen the inheritance/gift
tax and increase the tax cut benefits for the wealthy. Is this the right
policy? We know that a tax system in favor of the privileged is wrong. Please,
next time, devise a tax system that benefits the lower and middle income

Translator : Jeong Eun-Seong