Parliament passes controversial economic laws

SEOUL, May 1 (Yonhap) -- South Korea's parliament passed a string of economic
laws that the government claims are vital to fuel investments, cut waste and
boost growth, sources said Friday.
The bills call for adjustments to income taxes on real estate transactions and
permitting the merger of Korea National Housing Corp. and Korea Land Corp., which
have overlapping areas of operations.
Of the bills passed, several circumvented regular legislation and judiciary
committees and review processes, and were instead referred directly to the
plenary session by Speaker Kim Hyung-o after lawmakers were unable to find middle
ground after months of debate.
The passage of the new income tax rules temporarily scraps high tax rates for
multiple home owners, which at present allows the government to collect 45
percent of all profits generated by home sales.
Under the new rules that will be maintained until the end of 2010, income tax
rates will be lowered to a maximum 35 percent, while tax rates will be lowered
for sales of non-productive land held by both individuals and businesses.
The government said levying "punitive" taxes has effectively blocked sales of
homes that could bring down housing prices, although opposition lawmakers argued
the bill will only help the rich.
Parliament, which is effectively controlled by the ruling Grand National Party,
also passed a law permitting the merger of the state-run Korea National Housing
Corp. and Korea Land Corp., which have overlapping areas of operations.
The passage of the bill could help create a new organization in October that could
implement state policies on land and housing development and act as a role model
for government efforts to streamline the public sector.
The merger had originally been opposed by the unions of the two corporations,
with experts raising concerns that it could lead to the creation of a large
money-losing company that can become a burden on the government.
Others bills passed include a measure that will allow the National Health
Insurance Corp. to collect the country's health, employment, industrial accident
insurance and state pension premiums, and a news agency promotion law that aims
to enhance the competitiveness of Yonhap News Agency.
The passing of the economic bills, meanwhile, is expected to boost the incumbent
administration's drive to revive the sagging economy by stimulating consumer
spending and business activities through sales cuts and government stimulus
programs.
On Wednesday, parliament approved an unprecedented 28.4 trillion won (US$22.0
billion) extra budget plan that will be used to create 250,000 new jobs,
strengthen the country's social security net and be used to start large public
works projects.
yonngong@yna.co.kr
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