The government will push to raise the minimum annual salary subject to increased taxes to 55 million won (US$49,300) amid criticism that its latest tax code revision plan increases the tax burden on salaried and middle-income people, informed sources said Tuesday.
According to the sources, the government earlier submitted its plan to the ruling Saenuri Party to raise the minimum annual salary subject to the tax hikes to 55 million won from the 34.5 million won set in the initial tax code overhaul proposal.
The sources also said that those with an annual income ranging from 55 million won to 70 million won will see their tax burden increase by 20,000-30,000 won annually starting from next year.
This would be much lower than the 160,000 won estimated under the previous version.
The move comes amid heated debate over the government's recently proposed tax code revision plan that critics claim focuses more on increasing the tax burden on salaried people and the middle class.
Under the initial bill unveiled on Thursday, 4.34 million people, who account for about 28 percent of salaried workers, will see their tax burden grow heavier from next year, according to a government estimate.
In the face of strong criticism from both the opposition and ruling parties, President Park Geun-hye ordered her Cabinet on Monday to review the overhaul proposal and Finance Minster Hyun Oh-seok subsequently pledged to do so "as quickly as possible."
If the minimum salary is raised as expected, the number of people subject to higher taxes will be reduced from 4.34 million to 2.1 million, sources said.
This would end up shrinking the government's expected tax revenue by about 300 billion won. The government estimated that the initial tax overhaul plan could raise some 2.49 trillion won more in revenue over the next five years.
In order to fill the revenue gap, the government is reportedly considering toughening its crackdown on tax evasion attempts by high-income earners.