Jinseongjun "Inheritance Tax Rate Lower Than Income Tax Rate"
Democratic Party "Rejects Government's Tax Law Amendment Proposal"
As the government proposed a tax reform plan centered on inheritance tax reductions, opposition parties unanimously criticized it as a 'tax cut for the wealthy.' They pointed out that instead of focusing on tax cuts, the government should seek ways to cover the shortfall in tax revenue, signaling the upcoming disputes over tax laws in the National Assembly.
On the 26th, Jin Seong-jun, the Policy Committee Chair of the Democratic Party, said on MBC Radio's 'Kim Jong-bae's Focus' that "approximately 350,000 inheritance cases occur annually, but only about 20,000 of these pay inheritance tax," adding, "If most of the reduced tax revenue comes from easing inheritance tax, it is truly a tax cut for the ultra-rich." He also criticized the direction itself, stating, "The highest income tax rate on earned income is 45%, but if the highest inheritance tax rate is lowered to 40%, it means applying a much lower tax rate than income tax from labor."
He also argued that tax revenue would become even more insufficient under the proposed tax law revision. Jin, the Policy Committee Chair, said, "Since a decrease in tax revenue is certain, if we consider fiscal soundness and sustainability, the government should have presented separate policies for securing tax revenue or measures for tax base expansion," adding, "It is difficult to understand this tax cut policy that focuses on tax cuts for the wealthy without presenting any fiscal securing measures."
The Justice Innovation Party also criticized the proposed tax law revision. Seo Wang-jin, the Policy Committee Chair of the Justice Innovation Party, stated at a press conference held the previous day at the National Assembly Communication Hall in Yeouido, Seoul, that "(The Yoon administration's tax law revision) is a package of tax cuts for the wealthy, fiscal collapse, and tax increases on the common people," adding, "It openly condones the inheritance of wealth." He emphasized, "The fiscal collapse caused by the decrease in tax revenue is causing confusion throughout the government," citing "the collapse of the research ecosystem caused by the drastic cut in research and development (R&D) budgets" as a representative example.
The Ministry of Economy and Finance announced the 2024 tax law revision plan the previous day, focusing on inheritance tax reductions. The highest inheritance tax rate will be lowered from 50% to 40%, and the inheritance tax deduction amount per child will be raised from 50 million won to 500 million won. For example, even if 1.7 billion won is inherited by two children, with a basic deduction of 200 million won, child deductions totaling 1 billion won, and a spouse deduction of 500 million won, there will be no need to pay inheritance tax. A new marriage tax credit was also introduced, providing up to 1 million won in tax credits, 500,000 won per newlywed spouse. However, the comprehensive real estate tax revision was not included in this amendment.
However, amending the tax law requires consultation with the major opposition party. The proposed tax law revision is expected to become a contentious bill between the ruling and opposition parties in the National Assembly. Democratic Party members of the National Assembly's Planning and Finance Committee issued a statement the previous day, saying, "The Democratic Party will reject the government's tax law revision," and "The government should prepare the 2025 tax revenue according to the current tax law."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
