Gov`t eyes tax breaks to promote job sharing

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SEOUL, Feb. 12 (Yonhap) -- The government plans to provide tax benefits to
companies introducing a job sharing scheme in order to ease job losses amid a
deepening economic slump, officials said Thursday.
The tax incentive comes as the local job market is deteriorating at a
faster-than-expected pace. On Wednesday, the government reported a loss of
103,000 jobs last month from a year earlier, the sharpest fall in more than five
years.
Under the plan, companies that retain payrolls instead of firing workers will be
allowed to write off 50 percent of reduced salaries for existing employees as
expenditures.
Subject to the tax benefit are small and medium-sized companies whose business
conditions have significantly deteriorated in recent months.
"With a deepening global recession, our economy is also losing momentum in job
creation," the ministry said. "The tax benefits are designed to encourage
companies to retain payrolls despite toughening business conditions," the
ministry said.
In a related effort, the government is considering lowering income taxes on
severance payments by the end of this year to help those who recently lost their
jobs.
The moves followed an order by President Lee Myung-bak to his staff to find ways
to promote job sharing, while the finance ministry has been delving into diverse
tax breaks to encourage the adoption of such measures in the private sector.
On Tuesday, Finance Minister Yoon Jeung-hyun offered a dire outlook on the job
market, saying that around 200,000 positions will be lost this year as the
economy is expected to contract 2 percent, the first minus growth in more than a
decade.
Meanwhile, the government plans to offer tax cuts to stimulate the construction
sector, which accounts for a fifth of the nation's gross domestic product.
With credit conditions tightening and consumers reluctant to open their wallets,
many new houses remained unsold last year, brining some smaller cash-strapped
builders to the brink of bankruptcy.
As of the end of November, there were roughly 163,000 unsold houses across the
nation, higher than 103,000 reported a decade ago when the nation was hit by the
Asia-wide financial meltdown.
The ministry said it will try to unfreeze the market by providing tax cuts for
capital gains on real estate transactions made this year in all areas except
congestion restraint zones designated by the government in and around Seoul.
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