Yang Bunam Proposes Raising Credit Card Deduction Rate to 40% for Small Business Stores

Spearheading the Amendment to the Restriction of Special Taxation Act
"Supporting Small Businesses and Sustaining the Recovery in Consumer Spending"

Nam Yangbu, member of the Democratic Party of Korea.

Yang Bu-nam, a member of the Democratic Party of Korea (Gwangju Seo-gu Eul), announced on the 12th that he has sponsored an amendment to the Restriction of Special Taxation Act aimed at sustaining the recovering consumer sentiment-bolstered by measures such as livelihood recovery consumption coupons-and supporting the sales recovery of small business owners.

Under the current law, employees can receive income tax deductions for the portion of their annual credit card and similar expenditures that exceeds 25% of their total annual salary. The deduction rates are 15% for general consumption, 30% for cultural activities, and 40% for traditional markets.

Due to the ongoing contraction in consumer sentiment and sluggish domestic demand, small business owners continue to face management difficulties. To enhance consumers’ spending capacity and, in the long term, guide consumption toward a domestic demand-friendly direction so that benefits directly reach small business stores, institutional improvements are needed.

The proposed amendment raises the income deduction rate to 40%-the same as for traditional markets-for amounts spent at small business stores with annual sales of 3 billion won (approximately 30 million dollars) or less.

Additionally, to increase the tangible effect of year-end tax settlements for employees, the amendment raises the income deduction limit for credit card and similar expenditures from 2.5 million won to 4 million won for employees with a total annual salary of 70 million won or less, and from 3 million won to 5 million won for those earning more than 70 million won.

Yang Bu-nam explained, "Now that consumer sentiment is reviving, we need policies that encourage continued spending," adding, "The amendment aims to provide tangible tax benefits for employees and a stable sales base for small business owners, so that the momentum for livelihood economic recovery is not broken."

He also emphasized, "Small business stores are the foundation of the local economy and the core of employment," and pledged, "I will work to sustain the spark of economic recovery and create a virtuous cycle of consumption."