South Korea's Tax Burden Rate Reaches an Eight-Year Low

In a surprising turn of economic events, South Korea's tax burden rate has plummeted to its lowest since 2016, settling at a provisional 17.6%. This significant drop has sparked a heated debate on tax policies and their impact on the national economy.

Understanding the Tax Burden Rate

The tax burden rate, a critical indicator of the proportion of tax revenue within the national economy, has seen a consecutive decline under the current administration. From a peak of 22.1% in 2022, it has now dropped to the mid-17% range in 2024, marking a stark contrast to the OECD average of 25.4%.

Government's Response and Policy Shifts

The new government is advocating for a normalization of taxation, including potential increases in corporate tax rates, attributing the decline to previous tax cut policies. However, experts caution against targeting corporations without addressing underlying issues such as corporate performance and tax expenditure restructuring.

Controversy and Criticism

Plans to increase taxes, including corporate tax rates and securities transaction taxes, have met with resistance. Critics argue that such measures could harm domestic companies' competitiveness, especially in the face of anticipated high mutual tariffs from the United States.

Expert Recommendations

Instead of direct tax rate hikes, experts suggest expanding the tax base through measures like converting income deductions to tax credits and reducing tax-exempt individuals. They also emphasize the need for a comprehensive review of tax expenditures to ensure fiscal sustainability.