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Economic conditions

South Korea's Ruling Party Demands Tax Incentive Extension Amid Economic Slowdown

Strategic Insights

— 2 min read

As the South Korean economy shows signs of slowing down, the ruling Uri Party is pushing for an extension of tax incentives for smaller companies, research and development, and wage earners and farmers. This move is seen as a response to the government's plan to scale back or scrap various tax incentives, which is expected to increase tax revenues by 2-3 trillion won (US$2.1 billion-$3.1 billion) annually. The South Korean economy grew 0.8 percent in the second quarter, the slowest growth in over a year, due to a decline in construction and consumer spending.

Key Takeaways:

  • The Uri Party is demanding the extension of tax credits for smaller companies due to the economic slowdown.
  • The party also asked for an extension of tax incentives for research and development, wage earners, and farmers.
  • The government plans to scale back or scrap various tax incentives, which is expected to increase tax revenues by 2-3 trillion won (US$2.1 billion-$3.1 billion) annually.
  • The South Korean economy grew 0.8 percent in the second quarter, the slowest growth in over a year, due to a decline in construction and consumer spending.
  • The nation's fertility rate fell to 1.08 per woman in 2005, a record low, and the country is expected to officially become an aged society by 2018.
  • The ratio of the population aged 65 or older exceeded 7 percent in 2000, and is expected to double by 2018.
  • The South Korean economy is expected to grow 5 percent this year on the back of a recovery in private spending and resilient exports.

Statistics:

  • 2-3 trillion won (US$2.1 billion-$3.1 billion): The expected increase in tax revenue annually from scaling back or scrapping tax incentives.
  • 0.8 percent: The growth rate of the South Korean economy in the second quarter, the slowest growth in over a year.
  • 5 percent: The expected growth rate of the South Korean economy this year on the back of a recovery in private spending and resilient exports.
  • 1.08: The fertility rate per woman in 2005, a record low.
  • 7 percent: The ratio of the population aged 65 or older exceeded in 2000.
  • 2000: The year when the ratio of the population aged 65 or older exceeded 7 percent.
  • 2018: The year when South Korea is expected to officially become an aged society.

Sources:

  • (Yonhap) 11-08 1514
  • Asia Pulse - South Korea's ruling Uri Party demanded Friday that a slew of tax incentives the government is seeking to abolish or reduce be maintained for the time being since the economy is showing signs of a slowdown, officials said.

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