The government and the ruling party are criticizing, saying, “Even if the government changes, the politicians who held power in the past insist on running the government with the same values and ideology.” The largest opposition party, the Democratic Party of Japan (DPJ), insists that the corporate tax cut is for the ultra-wealthy who cannot give up. President Yoon Suk-yeol said, “Corporate tax cuts are not just for big companies. This must be passed to boost economic vitality.” I want you to handle it,” he objected.
The government and ruling party are proposing to cut the top corporate tax rate from 25% to 22%. The aim is to attract investment in high-tech industries such as semiconductors by lowering the corporate tax, which ranks seventh among the 38 member countries of the Organization for Economic Co-operation and Development (OECD). Taiwan’s maximum corporate tax rate is 20%. The difference in corporate tax rates between South Korea and Taiwan is 7.5 percentage points if local taxes are taken into account. The difference in tax burden is large, which inevitably limits investment. The DPJ is arguing that if the tax burden is reduced, only chaebol families will benefit from dividends, which is a “tax cut for the super-rich”. However, a corporate tax cut could create a virtuous cycle across the economy by boosting investment, creating jobs and increasing dividends to minority shareholders.
It is not desirable to see the debate between the government, ruling parties, and opposition parties over the corporate tax cut only in terms of “political meaning” rather than “economic meaning.” The competition between the US and China is causing global investors to leave China in search of new investments. Attracting investment is desperately needed to offset crises such as the rapidly expanding trade deficit. Contrary to the context of the proposed corporate tax cut, it is shortsighted to see it as a political framework, such as claiming it is a tax cut for the ultra-rich.
So, putting the national interest first and keeping economic logic in mind, it’s time to find an answer to the corporate tax cut problem. We need to know exactly why the six economic organizations are making statements every day calling for a reduction in the corporate tax, saying, “We cannot use the knives we used when it was safe during wartime.” The Korean Federation of Small and Medium Enterprises and the Korean Federation of Middle Market Enterprises also participated in the statement. The Korean economy is in a hopeless situation where its economic growth rate will drop by 1 percent next year and low growth will continue next year. Now is not the time to think about party identities and ideologies. I would like the government and ruling parties to quickly come up with a plan that will lead to a comprehensive agreement before the budget deadline, without being caught up in confrontation with the opposition parties.
