This study evaluates the need to reform the tax system and suggests means for its improvement, focusing on income tax and value-added tax.
The real-name financial system, implemented in August in 1993, is expected to make dramatic changes to taxation that will enhance impartiality, neutrality and efficiency. Taking these changes into account, the following improvements are suggested for income tax and value-added tax:
First, general taxation will be imposed on financial income, due to the real-name financial system. Therefore, excessively high tax rates should be avoided because it can undermine economic growth. Instead, the scope of general taxation needs to be expanded, and tax rates should be lowered over the mid- and long-term. To lower tax rates, the introduction of a ‘tax rate ceiling’ should be considered.
Second, there is a plan to introduce system to impose tax on profits gained from transfers of stocks after 1998, but, preparation is needed to originate complementary measures that take into consideration improvements in income distribution, effects on savings and investments, effects on the stock market, and controversy over the ‘stricter taxation for gains on transfer’ of the U.S.
Third, since it seems evasion of the value-added tax results from special treatment in taxation, the treatment should be abolished over the mid- and long-term. Instead, value-added taxation needs to be improved. It is difficult to accept arguments to lower value-added tax rates, considering the importance of sufficient tax revenues, an international trend focusing on value-added tax, and the low regressive tendency of value-added tax.
금융실명제 실시에 따른 세제개편방안 (Ways to reform tax system after introduction of real-name financial system)
개인소득세와 부가가치세를 중심으로
서울 : 한국개발연구원
|Series Title; No||정책연구시리즈 / 95-01|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|