Ruling bloc speeds up tax-for-rich drive

The Moon Jae-in administration and the ruling Democratic Party of Korea (DPK) are speeding up their plan to levy higher taxes on top conglomerates and super-rich individuals.

“We should speed up revising the tax system including the normalization of corporate tax and tax hikes on the super-rich,” Rep. Woo Won-shik, the DPK floor leader, said Monday during a meeting between party leaders and government officials.

“We should do our utmost to correct the distorted taxation put in place during the previous conservative governments by designing careful policies.”

With the party spurring the tax on the wealthy, Strategy and Finance Minister Kim Dong-yeon said the government will finalize a tax revision plan within a month, backing the government’s determination for a swift overhaul.

“Discussions on key economic policies will be in focus for the next one month,” Kim said. “The government plans to announce its direction for state management, draw up a tax revision plan and finish the allocation of the budget next month.”

Party leaders and economic officials will discuss the revision including corporate and income taxes in a meeting scheduled for Thursday, according to DPK chief policymaker Kim Tae-nyeon.

Talks on tax hikes gained traction after Choo proposed them during a meeting on national fiscal strategy held at Cheong Wa Dae and presided over by President Moon Jae-in last Thursday.

Choo demanded the government increase taxes on businesses earning over 200 billion won ($178.2 million) to 25 percent, and up the current 40 percent rate on individual taxpayers who earn 500 million won ($448,000) a year to 42 percent.

The move came amid growing concerns about the financial feasibility of Moon’s five-year policy agenda. The agenda, presented by the presidential advisory committee Wednesday, faced criticism as it did not include any tax hike plan, while highlighting expanded welfare and job creation.

Moon responded positively the following day, saying he expected the finance ministry to prepare a tax plan in line with Choo’s call, viewed as being based on a consensus with Cheong Wa Dae, which managed to avoid the burden of having to bring up the tax hike issue first, DPK officials said.

Choo stressed the tax hike would only target the super rich and top conglomerates, calling it a way of bringing tax justice.

“I’d call it a tax for noblesse oblige,” she said during a party meeting Monday. “I’d rather say we are just asking the super rich to take responsibility in society commensurate with their status.”

Kim also framed it as a way to “gain respect from the public,” a remark intended to mitigate public antipathy toward the idea of increasing taxes. The party has long argued that the tax rate for enterprises, previously cut from 25 percent to 22 percent under the Lee Myung-bak administration, should be “normalized” so that the country can ease its budget deficit.

It is expected that the President will bring up the issue during meetings scheduled with businessmen Thursday and Friday.