[2024 National Audit] Choi Sang-mok: "Will Conduct Comprehensive Review of Income Tax Inflation Indexation"

October 11 National Assembly Planning and Finance Committee Audit

Choi Sang-mok, Deputy Prime Minister for Economy and Minister of Strategy and Finance, stated on the 11th during the National Assembly's Planning and Finance Committee audit that he would "comprehensively review" the introduction of a system linking income tax taxable standards to the inflation rate.

Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok is responding to a lawmaker's question during the audit of the Ministry of Economy and Finance at the Planning and Finance Committee held at the National Assembly on the 11th. Photo by Hyunmin Kim kimhyun81@

During the audit of the Ministry of Strategy and Finance, Deputy Prime Minister Choi said, "The inflation-related linkage part is a fundamental issue." The income tax inflation linkage system is a system that links taxable income brackets or deduction standard amounts under the Income Tax Act to inflation. It has been introduced in major countries such as the United States to prevent nominal income from increasing due to inflation while real income remains the same, resulting in higher tax rates being applied.

Regarding the direction of reform for the comprehensive real estate tax, which was not included in the tax law amendment bill, Deputy Prime Minister Choi said, "Comprehensive review is needed considering various factors such as the relationship with local finances," and added, "The government's position is to ease the burden of the comprehensive real estate tax."

He also reiterated the position that no additional government bonds will be issued despite the tax revenue shortfall. He stated that adjustment of local allocation tax and grants is inevitable. Deputy Prime Minister Choi added, "There was a lack of communication with local governments during the adjustment process of local allocation tax and grants last year, but we will do our best to prevent such issues from occurring this year."

Following the 0.25 percentage point cut in the base interest rate by the Financial Monetary Policy Committee of the Bank of Korea, related questions continued. When Park Dae-chul, a member of the People Power Party, asked, "Did you anticipate the interest rate cut?" Deputy Prime Minister Choi responded, "I respect and welcome the decision to lower the interest rate."