"Running Out of Funds, What Can Be Done by Winning the Election?"... Opposition Voices Concerns Over Flood of Tax Cut Policies

Cha Gyugeun: "Untimely Tax Cut Policies Weaken Fiscal Foundations"
Proposal to Form a Special Tax Reform Committee
Innovation Party, Progressive Party, Basic Income Party, and Social Democratic Party Criticize Tax Cut Policies

Concerns have arisen from the opposition regarding major political parties consecutively proposing tax cut-related bills amid an unprecedented tax revenue shortfall situation. They argue that in the face of a structurally worsening tax revenue deficit, the entire tax system should be structurally reviewed and solutions devised.

On the 27th, Cha Gyu-geun, chairman of the Policy Committee, and other members of the Joguk Innovation Party held a press conference urging, "A special tax reform committee should be formed in the National Assembly so that our legislature can escape from self-destructive tax cut competition and prepare mid- to long-term alternatives."

Rep. Cha warned, "Recently, an untimely tax cut competition has broken out in some parts of the National Assembly," adding, "Considering that a tax revenue shortfall amounting to a staggering 87.2 trillion won occurred over the past two years, and that a tax revenue deficit is also expected this year, engaging in tax cut competition now is highly inappropriate." He acknowledged that "there may be parts that need improvement when looking at specific details such as income tax or inheritance tax," but cautioned, "If we get caught up in the details and cut taxes, the already weakened fiscal foundation will be further undermined overall."

According to the 'Long-term Fiscal Outlook' recently published by the National Assembly Budget Office, the deficit is expected to surge from 25.7 trillion won in 2025 (equivalent to 1% of GDP) to 488.3 trillion won in 2072 (equivalent to 11.6% of GDP). While total revenue, including national tax revenue and non-tax revenue, is projected to increase by 0.8% annually, total expenditure is expected to rise by 1.6 percentage points.

Chairman Cha diagnosed the current fiscal structure as "unsustainable," adding, "Moreover, the fact that we face numerous critical issues that must be resolved now, such as low birth rates and aging population, inequality and polarization, and the climate crisis, is also problematic." The places where money needs to be spent are increasing.

In particular, regarding the flood of tax cut demands amid speculation about an early presidential election, he criticized, "Can rushing into a tax cut competition just for the immediate election be called responsible politics for the future?" He added, "If the treasury runs dry and we cannot do what we want or need to do, what good is winning an election by cutting taxes? That is not why we seek to govern."

Yonhap News

On this issue, Chairman Cha proposed forming a special tax reform committee with equal representation from both ruling and opposition parties. He suggested establishing expert committees to prepare reform plans that go beyond individual tax items, setting principles for tax reform and annual tax burden rate targets.

Among the progressive opposition parties excluding the Democratic Party, concerns were expressed over the consecutive tax cut policies emerging around Democratic Party leader Lee Jae-myung. In particular, regarding the decision to ease inheritance tax, the Innovation Party, Progressive Party, Basic Income Party, and Social Democratic Party held a joint press conference with civic groups on the same day.

Yoon Jong-oh, floor leader of the Progressive Party, criticized, "The Democratic Party advocates an 'income tax inflation adjustment system' that raises income tax brackets according to inflation, but even the Ministry of Economy and Finance, which implemented the Yoon Seok-yeol administration's tax cut policies, does not welcome this." He added, "The Democratic Party has long claimed to be the 'party of the middle class and ordinary people,' and Leader Lee recently declared a 'universal basic society,' so if they advocate tax cuts like this, where will the funds necessary to realize the Democratic Party’s goals come from?"