Big biz lobby calls for corporate tax cuts

SEOUL, Oct. 11 (Yonhap) -- South Korea's big business lobbying group urged the government Tuesday to lower the country's corporate tax rates in a bid to fuel investment and improve the global competitiveness of local companies.
The Federation of Korean Industries (FKI) said the tax rate for large businesses, currently at 22 percent, should be lowered further to reduce the burden felt by companies operating in the country.
The conservative Lee Myung-bak administration lowered the tax rate for big business by 3 percentage points in 2009, and wanted to adjust it to 20 percent next year. This plan, however, has run into political opposition as the general public is opposed to lowering taxes for the country's family-owned conglomerates.
"Some have claimed that the country's tax rate is low compared to others, but such views do not reflect the overall burden felt by businesses," the lobbying group said. "If all quasi-taxes and allotments are tallied, tax-related outlays of local companies are larger than those doing business in other industrialized economies."
Even the Organization for Economic Cooperation and Development has called on Seoul to lower corporate taxes, while raising rates for value-added tax, it added. Lowering taxes can make the country more attractive to foreign direct investment.
The lobbying group, citing data from the National Tax Service, meanwhile, said that despite South Korea's corporate tax rate falling from 28 percent in 1995 to 22 percent at present, the total amount of taxes collected jumped 4.3-fold from 8.7 trillion (US$7.4 billion) won to 37.3 trillion won in the same period.
"During the same period, the country's gross domestic product only expanded 2.9 percent so tax earnings exceeded economic growth," the FKI pointed out.
Thanks to lower tax rates, private sector business investments nearly doubled to 112.3 trillion won last year from 57.5 trillion won tallied in 1997, it added.