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The government will implement massive tax reductions during Lee's term cutting income, corporate and property taxes by W21 trillion with a view to restoring the economy and creating jobs and new growth engines (US$1=W1,118). It remains to be seen whether the tax cuts will give momentum to Lee's economic policies, dubbed MBnomics, before they crumbled amid massive anti-government protests that claimed the full privatization of public and state-invested corporations as their first victim.
The Ministry of Strategy and Finance and the ruling Grand National Party on Monday disclosed a tax reform program envisaging total tax cuts of W21 trillion, including tax reduction of W11 trillion in 2008 and 2009. The ministry and the GNP vowed to reduce income tax to boost consumption and lower corporate tax to help businesses invest more.
The ministry and ruling party also pledged to promote technological development by giving massive tax breaks to businesses for investment in research and development, and rejuvenate the property market by lowering capital gains and comprehensive real estate taxes.
If the tax program is successful, the government says increase of consumption and investment floundering at the 2 percent level on average over the past decade will rise to 6 and 12 percent in five years. And the portion of R&D in GDP will increase from 3.2 percent in 2006 to 5 percent five years hence.
The government will lower income tax rate for workers and self-employed businesspeople by 2 percentage points in total -- 1 point each in 2009 and 2010. Inheritance and gift tax, currently at 10-50 percent, will be lowered to the 6-33 percent range, similar to income tax, over the next two years. Corporate tax will also be reduced gradually from the current 13-25 percent to 10-20 percent by 2010.
(englishnews@chosun.com )
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