SEOUL– The ruling and opposition parties announced an agreement on next year’s national budget Thursday after a weekslong impasse over how much to cut the corporate tax rate and other issues.
The floor leaders of the ruling People Power Party (PPP) and the main opposition Democratic Party (DP), Reps. Joo Ho-young and Park Hong-keun, respectively, announced the deal on the Yoon Suk Yeol administration’s first budget and agreed to pass it through the National Assembly on Friday.
Since missing the Dec. 2 legal deadline on passing the government’s 639 trillion-won (US$500 billion) budget proposal, the PPP and the DP had failed to narrow their gaps on key sticky issues, including the scope of corporate tax cuts.
Under the agreement, the parties decided to cut the corporate tax rate by 1 percentage point in each of the four tax brackets, which would bring the highest tax rate of 25 percent down to 24 percent.
The government and the PPP had initially called for a 3 percentage-point cut, claiming the country’s high corporate tax has hampered investment by major companies, while the DP rebutted that a 3 percentage-point cut would only benefit the superrich.
The rival parties also agreed on an accompanying bill that calls for postponing the taxation of income of over 50 million won from investments in stocks, bonds and other financial products by two years to Jan. 1, 2025.
Until then, capital gain taxes will continue to apply only to major shareholders with shares worth at least 1 billion won per type of stock.
The agreement came a day after National Assembly Speaker Kim Jin-pyo issued an ultimatum for the budget bill’s passage after rival parties snubbed two deadlines and proposals he suggested.
Kim said he plans to convene a parliamentary plenary meeting Friday to pass either the government’s proposed bill or an independent bill drawn up by the DP.
Source: Yonhap News Agency