Gov't to keep tax benefits for low, middle-income earners

SEOUL, Aug. 14 (Yonhap) -- The government will focus on offering tax benefits for
low and middle-income earners in its annual tax reform measures to be unveiled
later this month as part of efforts to help its citizens tide over a protracted
economic slowdown, officials said Friday.

The move comes as concerns are growing that the government might be scaling back
diverse tax benefits provided to individuals and companies in order to broaden
its tax income base.
According to the Ministry of Strategy and Finance, the government will unveil its
annual tax reform plan later this month which will focus on extending the
duration of tax reductions and other benefits for low and middle-income earners.
Many tax cuts and benefits are to be scrapped by the end of this year. The
government will keep providing them in areas deemed to be "closely related to the
livelihood of ordinary people." These would include housing, working conditions
and post-retirement life.
The government, however, will step up efforts to monitor tax evasion by
high-income earners including doctors and lawyers in a way to plug a hole in its
revenue, sources said. Detailed measures will be determined within this month.
"Last year's tax reform focused on boosting the (slumping) economy but the top
priority for this year's tax reform will be providing help to low and
middle-income people," a high-ranking official said on condition of anonymity.
"In particular, we will expand tax benefits or extend their period to help
self-employed, smaller companies, farmers and fishermen."
The move seems to be in line with President Lee Myung-bak's increased attention
on the livelihood of ordinary people amid a protracted economic slump.
South Korea's government has been pushing to stimulate the economy by spending
more and offering tax reductions. The drive, however, caused the nation's fiscal
status to deteriorate, raising debate that the government should scale back tax
cuts.
South Korea's economy, Asia's fourth-largest, is expected to shrink 1.5 percent
this year, the first negative growth in more than a decade. The government said
it will keep its expansionary macroeconomic policy until the economy shows a
marked sign of recovery.
kokobj@yna.co.kr
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