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2015-01-22 17:13
By Jun Ji-hye

The government is facing growing criticism for alleged dishonesty and indecisiveness about tax increases, intensifying the anger of more than 15 million employees regarding income tax brackets, according to experts and lawmakers.

The collective ire does not seem likely to abate soon, though the government and the ruling Saenuri Party vowed to revise the Income Tax Law.

The governing party said Wednesday that it will expand tax refunds for families with children, households with newborn babies, and single people through an amendment to the law and retroactive applications for 2014 tax returns.

The measure is an apparent attempt to placate salaried workers who are furious over changes to income tax codes. They got upset over what they see as having to pay an increased amount of tax, despite the government’s explanation that only high-income earners would have to pay more tax.

Critics said, however, that such a stopgap measure cannot resolve the tax controversy that has frequently hit the government since Park’s inauguration in February, 2013, given that the problem was originally caused by Park’s campaign policy ― welfare without tax hikes.

In the lead-up to the 2012 presidential election, Park promised that all senior citizens aged over 65 will receive 200,000 won under a basic pension program, and parents with children aged between 3 and 5 will receive state subsidies in a free childcare system.

When asked how her administration would secure the necessary astronomical budget, she said, “There will be no tax hikes.”

However, while attempting to provide welfare without tax hikes, the government had no choice but to increase taxes furtively.

When it moved to increase car tax last year, the government kept saying, “It is not a tax hike,” while stating that increasing cigarette prices by 2,000 won was designed to protect the health of the people, and was not a means to secure tax revenue.

Experts called for the government to be honest about tax hikes as there is no welfare without such increases.

“President Park made unfeasible election pledges and concluded with the wrong judgment about tax increases, which intensified public anger,” said Bae Jong-chan, the chief director at Research and Research. “Park needs to be honest about this issue, and fundamentally review and repair the tax law in order to persuade the people, rather than be indecisive about possible tax increases.”

Rep. Shim Jae-chul of the ruling party criticized the government for using trickery to introduce tax hikes.

“The government has been trapped in providing welfare without tax hikes, so it was not able to honestly talk about tax boosts,” he said. “The income tax codes were also a measure for tax increases.”

Retroactive application of the revised tax law is legally possible as long as it is advantageous for taxpayers.

In practice, however, it is expected to cause chaos.

Taxpayers, their companies and tax authorities, who will complete the process of 2014 tax returns soon, will have to recalculate the amount of tax returns or additional payments in April or May when the National Assembly is expected to approve the revision.

This was not the first time that the government has met fierce criticism from the people regarding the tax affairs. And it was not the first time either that the government and the governing party changed their policy to quell such controversy.

In 2013, the Park government scaled down its proposed plan to collect more taxes from middle-income earners after the plan triggered a strong backlash. In a revised offer, the government raised the baseline salary level subject to higher income taxes to 55 million won from an initially proposed 34.5 million won.

Follow Jun Ji-hye on Twitter @TheKopJihye

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