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SEJONG, June 20 (Yonhap) -- The government is expected to unveil a plan next week detailing how to streamline its tax cut and exemption system in a way that helps raise additional revenue for expanded welfare programs, sources said Thursday.
The plan would be the first of its kind that specifies the methods by which the government pushes to secure about 18 trillion won (US$15.7 billion) over the next five years by reducing or eliminating existing tax benefits. The move is aimed at meeting growing welfare demand without hiking actual tax rates.
"The research results by the Korea Institute of Public Finance have been out on how to streamline tax exemptions and reductions," a finance ministry official said on condition of anonymity.
"They will go through a public hearing on June 27 to collect opinions from each concerned area. We will finalize a government proposal before announcing our annual tax code revision plan in August."
The government is reportedly providing tax exemptions and reductions estimated at about 30 trillion won every year. Of them, 17 trillion won goes to low- and middle-income earners, and small businesses, while 11.6 trillion won is for the wealthy and large conglomerates.
Tax benefits for such high-income earners are expected to be the focus of the government overhaul plan.
The finance ministry plans to phase out tax benefit programs in order to secure additional money necessary to carry out its expanded welfare programs being pushed by President Park Geun-hye, who took office in February.
Experts say that the government needs about 135 trillion won over the next five years to deliver on the president's major campaign pledges. The government has said that it will secure necessary money without hiking tax rates.
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