Deputy Prime Minister and Finance Minister Hyun Oh-seok on Tuesday mentioned the possibility that the government may later change their current position not to increase the tax burden on the wealthy.

Though Hyun clarified that tax hikes were not being pushed by policymakers at the present stage and should be a last resort, his remarks appear to be somewhat different from their strong denial over a feasible hike for the rich.

Hyun reiterated ― as a policy to provide the underprivileged with state funds ― that the Finance Ministry would continue to prioritize legalizing the underground economy and scaling back non-taxation benefits.

“When the state tax revenue falls short of policymakers’ expectations despite implementation of the policies, then, the government could consider raising taxes (as an alternative),” he told reporters.

On Monday, President Park Geun-hye hinted that the administration could later review the necessity of raising income taxes during her trilateral meeting with ruling and main opposition party leaders.

However, market observers say that the remarks of Park and Hyun stayed at a theoretical level. Some downplayed the possibility in reflection of the basic idea that the incumbent administration would ultimately seek to avoid angering high-income households.

Earlier this month, 10 lawmakers of the main opposition Democratic Party proposed a motion to raise the upper ceiling on tax rates and widen the scope of the top tax bracket.

Meanwhile, Hyun pledged to actively support small- and mid-sized enterprises’ investment in research and development during his meeting with economic policy-related ministers earlier in the day.

The state funding project into the SMEs’ R&D investment will come to 821.3 billion won ($746.6 millio) next year, compared with 783.7 billion won for 2013, the Finance Ministry said in a statement.

The minister also said the government would instruct state-policy banks such as the Korea Development Bank and the Export-Import Bank of Korea to increase funding for corporate facilities investment by 5.3 trillion won ($4.8 billion).


By Kim Yon-se
(kys@heraldcorp.com)