Parliament may stop tax cuts if businesses fail to invest: lawmaker

SEOUL, Aug. 30 (Yonhap) -- Parliament may decide to stop corporate and income tax
cuts for up to two years unless businesses start to invest more, a top
policymaker for the ruling party said Sunday.
Grand National Party (GNP) chief policymaker Kim Seong-jo told Yonhap News Agency
that the original goal of the tax cuts was to fuel corporate investment to create
more jobs and revive the sluggish economy.
"Despite such designs to stimulate investment, companies have so far held back,
raising demands in the National Assembly to cease offering such benefits," he
said.
The lawmaker said that while the GNP does not object to the government's overall
policy of lowering taxes, talks may take place next month that would stop tax
cuts planned for 2010 and the following year. This, he said, could help the
government reduce its ballooning debt.
The Lee Myung-bak administration, inaugurated early last year, has maintained a
"business-friendly" stance to get companies to invest more. Such measures and
various economic stimulus packages have received praise from entrepreneurs, but
they are causing the national debt to rise sharply.
The government and the GNP have been criticized for helping the rich at the
expense of the underprivileged, while Kim pointed out that the companies' lack of
investment is attracting criticism from both the GNP and opposition parties.
He stressed that if the corporate sector is unable to make timely investments
using the tax breaks, the government can opt to revive the economy by collecting
more taxes and using the money to push forward additional stimulus programs.
The South Korean economy is showing signs of shaking off the impact of the global
financial and economic crisis brought on by the collapse of Lehman Brothers last
year, although the government said growth will contract this year compared to
2008.
yonngong@yna.co.kr
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