[Weekly Outlook] Focus on 'Corporate Tax and Comprehensive Real Estate Tax' Debate at National Audit... August Current Account Announcement

Joo Ho-young, floor leader of the People Power Party, is delivering an acceptance speech after being elected as the chairman of the National Assembly Steering Committee at the plenary session of the National Assembly on the 27th. Photo by Yoon Dong-joo doso7@

Next week, the National Assembly will hold a government audit of the Ministry of Economy and Finance and other related agencies. With significant differences in positions between the ruling and opposition parties regarding tax relief, attention is focused on how the debate over corporate tax cuts and comprehensive real estate tax (종합부동산세) relief will unfold.

According to related ministries on the 1st, the National Assembly's Planning and Finance Committee will conduct a two-day audit of the Ministry of Economy and Finance on the 4th and 5th. The 4th will cover economic and fiscal policies, and the 5th will focus on tax policies.

The government is promoting tax reduction policies such as corporate tax cuts for large corporations, raising the exemption threshold for capital gains tax on stock transfers, and abolishing the progressive tax on the comprehensive real estate tax for owners of three or more houses.

On the other hand, the major opposition party, the Democratic Party of Korea, defines corporate tax cuts and the abolition of the progressive comprehensive real estate tax for owners of three or more houses as "tax cuts for the wealthy," so a heated debate is expected.

Earlier, on the 28th of last month, Lee Jae-myung, leader of the Democratic Party, in his first floor negotiation group representative speech at the National Assembly, warned that he would "do his best to block" the government's push for corporate and comprehensive real estate tax cuts, signaling a 'budget war.'

Additionally, the National Assembly's Political Affairs Committee will conduct a government audit of the Financial Services Commission on the 6th. The committee is expected to focus on financial support measures for small business owners and low-income citizens struggling due to recent rapid interest rate hikes, as well as issues related to virtual asset management.

Citizens are shopping at the Nonghyup Distribution Hanaro Mart Yangjae Branch in Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@

The Statistics Korea will announce the consumer price trends for September on the 5th.

The consumer price inflation rate surged to the 6% range in June and July but eased somewhat to 5.7% in August. If the rate of increase declines for two consecutive months through September, expectations for a peak in inflation may grow.

According to the Bank of Korea's recently released 'September Consumer Sentiment Survey,' the expected inflation rate was recorded at 4.2%, down 0.1 percentage points from 4.3% in August.

The government has previously stated that consumer prices are likely to peak by October at the latest. However, with electricity and gas rates rising and raw material prices increasing due to the Ukraine crisis, if the slowdown in inflation proceeds at a gradual pace, high inflationary pressure may continue for a considerable period.

The Bank of Korea will release the 'August Balance of Payments (provisional)' statistics on the 7th. In July, the current account surplus was recorded for the third consecutive month at $1.09 billion, but the trade balance turned to a deficit for the first time in 10 years and 3 months due to rising import prices of raw materials and other goods.

Attention will be on whether the current account turned to a deficit in August. Im In-hyeok, head of the International Balance of Payments Team at the Bank of Korea's Economic Statistics Bureau, said on the 7th of last month, "There is a possibility of a temporary current account deficit in August, but the annual surplus will be maintained."