Are tax cut plans by ruling party viable?

 Ruling People’s Power Party (PPP)  interim leader Han Dong-hoon, center, waves hand to the public as he appears in a  campaign for PPP candidates in Chuncheon, Gangwon Province, Wednesday. Yonhap

The ruling People Power Party (PPP) is pledging to lower taxes to woo voters in the lead-up to the April 10 general elections, but whether such pledges are viable remains doubtful as the government is struggling with a record shortfall in tax revenue.PPP interim leader Han Dong-hoon has promised to halve the value-added tax rate to 5 percent from 10 percent for daily necessities, including instant rice, noodles, canned foods and diapers, to ease the burden on households due to the high cost of living.He also promised to drastically soften tax rules for microbusiness owners to exempt an increasing number of them from paying relatively high taxes on their sales.The government approved a reform measure in February to hike the threshold — from 80 million won ($59,000) to 140 million won — for levying taxes for annual sales made by microbusiness owners. Those below the threshold are subject to between 1.5 and 4 percent tax rates, while others are subject to a 10 percent tax rate.Under the circumstances, Han pledges to hike the threshold again — from 140 million won to 200 million won.”I must say Han’s pledges may end up as empty, sugar-coated promises, because fulfilling promises means the government’s shortfall in tax revenue will get worse,” Myongji University political science professor Shin Yul said.He pointed out that tax revenue fell 51.9 trillion won in 2023 from a year earlier due mainly to weak corporate activities and the property market slump.

The government collected 344.1 trillion won in taxes in 2023, down from 395.9 trillion won a year earlier.The amount collected last year was 56.4 trillion won less than the Ministry of Economy and Finance’s forecast in its 2023 budget planning. Such a shortfall is a record high for any administration.Of the entire amount of revenue, value-added tax accounts for more than 20 percent. It is also one of the three sources of the government’s tax income along with corporate tax and personal income tax.Choi Gi-ho, an economics professor at the University of Seoul, expressed concerns that lowering the value-added tax rate may “further deepen the shortage of tax revenue.”Concerning Han’s push to ease tax rules for microbusiness owners, Choi cited the finance ministry’s study that estimated value-added tax will decrease by about 400 billion won if the relevant threshold was hiked from 80 million won to 140 million won.”The reduced amount will be much larger if the threshold is raised to 200 million won,” the professor said.The professor said that, instead of easing tax rules, providing vouchers and cash-like coupons for those in the bottom income bracket could be more effective in improving their livelihoods.Meanwhile, the finance ministry said it is aware of Han’s pledges concerning tax cuts, adding, “We received relevant requests from him.”It said whether it will accept Han’s request will be decided after “thoroughly going over the impact on the public’s 온라인카지노 finances.”

Leave a Reply

Your email address will not be published. Required fields are marked *