Ruling New Frontier Party representative Kim Moo-sung expressed his opposition to the government plan for taxation on corporate internal reserves on September 16.
The Tax Law has to be revised, and thus the handling of the bill in the National Assembly could become difficult if the ruling party figures, including the representative, are opposed to it. His announcement is likely to have a sizable impact in that the taxation plan is a part of Deputy Prime Minister Choi Kyung-hwan’s major policy measures for economic recovery.
“Companies are refraining from investment because they cannot find income sources and the uncertainty about the future is too high, which means that they are keeping money because of instability,” he said at the National Finance Research Forum that day, adding, “Then, it is just not right for the government to levy taxes on their concerns.” He also pointed out, “I believe that a better alternative is the government helping the corporate sector be sure about the future by other means such as deregulation, and I am opposed to the taxation plan.”
Na Sung-rin, senior representative of the forum of lawmakers, agreed with him by saying that there are plenty of arguments against the plan, which are based on the possibility of double taxation, deterioration in financial structure, and the feasibility of the taxation criteria. “It is true that other countries such as the United States, Japan, and Taiwan impose taxes on internal reserves,” he said, continuing, “However, their taxation is limited to cases when a shareholder tries to dodge dividend income taxes, meaning their purpose and target are different from those of the government’s plan.”