[Interview] Ryu Seong-geol "Will Accelerate Simplification of Corporate Tax Base and Reduction of Tax Rates"

Chairman of the People Power Party's Special Committee on Price and Livelihood Stability

Increase in Fuel Tax Reduction Rate
Amendment to the Transportation Energy and Environment Tax

Democratic Party Also Agrees on Livelihood Issues
Opposes More Than 50% Cut

Ryu Seong-geol, member of the People Power Party./Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Hyunju Lee] Ryu Seong-geol, chairman of the People Power Party's Special Committee on Price and Livelihood Stabilization, stated on the 1st, "Once the National Assembly's organization is normalized and the Planning and Finance Committee convenes, we will prioritize passing the bill to amend the Transportation, Energy, and Environment Tax and review the bill to simplify the corporate tax brackets and reduce tax rates."

In an interview with Asia Economy on the same day, Representative Ryu said, "We will prevent any leakage in the government's policy effects through amendments to fuel tax and corporate tax," expressing his intention to expedite the passage of bills amid soaring prices and cooperate with government policies to the fullest extent. Representative Ryu served as the secretary of the Planning and Finance Committee in the first half of the 21st National Assembly and has been designated as the ruling party's secretary for the second half as well.

The government implemented a 37% reduction in fuel tax starting that day. Representative Ryu, along with members of the Price Special Committee, visited a gas station in Geumcheon-gu, Seoul, to observe how the fuel tax reduction, effective from that day, was being applied on-site.

Ryu Seong-geol, member of the People Power Party./Photo by Yoon Dong-ju doso7@

He expressed a positive stance on discussions regarding the amendment to the Transportation, Energy, and Environment Tax to increase the fuel tax reduction rate. The People Power Party's Price Special Committee had previously proposed an amendment to the Transportation, Energy, and Environment Tax Act to expand the flexible fuel tax rate from the current 30% to 50%. Representative Ryu said, "Many livelihood-related issues are also agreed upon by the Democratic Party," and predicted, "Since the Democratic Party is also talking about 50%, once the National Assembly is organized, it can be processed quickly."

However, he opposed the proposal to reduce the fuel tax by more than 50%, stating, "There are principles of taxation." He explained, "Because taxes have fundamental goals and purposes, it is possible to adjust prices to some extent, but it cannot be done up to 100%." Currently, a bill proposing a 100% reduction in the fuel tax rate has also been submitted, and difficulties are expected during the Planning and Finance Committee's bill discussions.

Four-tier Corporate Tax Brackets
Only South Korea Among OECD Countries
No Pressure to Lower Interest Rates

Representative Ryu also expressed his intention to expedite the reduction of corporate tax rates. The first bill he submitted in the 21st National Assembly was an amendment to the Corporate Tax Act. The core of the bill is to unify the current four-tier corporate tax system, which ranges from 10% (for income up to 200 million KRW) to a maximum of 25% (for income over 300 billion KRW), based on tax brackets.

Referring to the four-tier tax brackets, Representative Ryu said, "South Korea is the only country among the Organization for Economic Cooperation and Development (OECD) countries that has set it up this way. The tax brackets need to be simplified." He added, "The highest tax rate in the OECD averages 21.5%, but ours is 25%. The tax rate should also be lowered." He believes that simplifying the corporate tax system will help attract capital and create jobs.

Regarding criticisms that the ruling party is pressuring financial institutions to lower interest rates, he refuted, saying, "We have never told them to lower interest rates." Representative Ryu stated, "In a market economy system, how can we tell them to raise or lower interest rates?" He explained, "Finance is an industry, and loans are products, so consumers need to receive explanations and understand their characteristics, which is why disclosure is required." He emphasized the need to resolve the 'information asymmetry.' Representative Ryu added, "Basically, I am a market advocate, but if the market does not function properly, the government must intervene," and "When the market fails, government intervention is necessary for efficient resource allocation."