Monday, January 2, 2012
The National Assembly has passed a bill on the introduction of a 38% tax rate on the highest income bracket of 300 million won (259,000 dollars) or more. The bill was approved in a plenary session on Saturday, just 10 minutes before the start of the New Year.
The parliamentary strategy and finance committee concluded revision of the Income Tax Act by putting the brakes on a planned tax cut for the rich by curbing the reduction of the tax rate on such people.
Mindful of votes ahead of April`s general elections, however, ruling and opposition party lawmakers revived the so-called Korean Buffett tax at the last minute. Not only the government but also Park Geun-hye, chairwoman of the ruling Grand National Party`s emergency committee, opposed the bill but to no avail.
Certain members of the opposition claimed that the tax hike is a mere formality since it is applied only on 0.17% of income earners. Yet others warn that the decision has reversed tax policy from cuts to hikes and that this will fundamentally shake up national tax policy going forward.