S. Korean govt pressured by rising tax burden among households

South Korean President Park Geun-Hye speaks during her New Year news

conference at the presidential Blue House in Seoul, Jan 12, 2015.

SEOUL - Tax burden among households in South Korea grew at a faster pace than income gain, putting political pressures on the Park Geun-hye administration amid the lowest approval rating, statistical agency data showed Monday.

Average monthly income of households with two family members and more was 4,314,334 won ($3,935) during the January- September period in 2014, up 3.6 percent from a year earlier, according to Statistics Korea.

During the same period, households' monthly tax expenditure averaged 154,276 won, up 5.9 percent from a year ago.

The tax expenditure includes regular taxes - income tax and property tax - as well as non-recurring taxes such as acquisition taxes for property and cars.

When including indirect taxes such as consumption tax and added- value tax, households' tax burden would have increased faster than the nominal figure.

Tax expenditure for households has grown faster than income increase for five straight years since 2010 when tax expenditure jumped 11.5 percent while household income grew 5.8 percent.

Rising tax burden for households put additional pressures on President Park's government amid public outrage over the revised tax code, which increased tax burden for low- and middle-income brackets while reducing those for high-income class.

During the tax settlement period earlier this year, the tax code revision from income deduction to tax deduction raised tax burden for middle-income earners, causing a public fury. Tobacco prices were raised by a whopping 80 percent from this year, increasing living expenses especially among low-income earners.

President Park's approval rating remained at the lowest level for two straight weeks. According to a poll by Gallup Korea, Park' s support rate was 29 percent last week, the lowest since her inauguration in February 2013.

Public anger escalated further on reduced burden for corporate tax, the rate of which was lowered under the Lee Myung-bak government from 2008 to 2012.

The government's tax revenue from companies reduced 1.3 percent in 2013 and 0.9 percent in 2012 respectively, but income tax revenue expanded 4.4 percent in 2013 after rising 8.3 percent in 2012, 12.8 percent in 2011 and 9 percent in 2010 each.

The government was accused of raising income tax on wage earners to fill up shortage of corporate tax revenue.

Even the ruling Saenuri Party criticized President Park for her signature pledge of "welfare without tax hikes" as the government actually raised taxes, such as tobacco prices, which imposed heavier burden on low-income class.

The main opposition New Politics Alliance for Democracy called for the corporate tax hike, but Kim Moo-sung, ruling Saenuri party leader, objected to higher tax burden for companies citing lackluster economic conditions.

President Park said during a meeting with senior secretaries on Monday that the tax shortage should be filled up by stimulating the economy, denouncing the ruling party leader's call for tax hikes.

Park, however, noted that the government would review possible tax hikes if lawmakers discuss the issue and gain people's sympathy toward it.