South Korea’s National Assembly on Saturday passed the 638.7 trillion won ($497 billion) of government budget for 2023 as well as bills to cut corporate tax rate and delay financial investment income tax amid signs of economic slowdown.
The ruling People Power Party (PPP) and the main opposition Democratic Party (DP) approved the Yoon Suk-yeol administration’s first budget, 22 days after its legal deadline of December 2, reports Yonhap News Agency.
The bill passed 251-4, with 18 abstentions, in an assembly where the DP holds a majority of 169 out of 300 seats.
The final package was down 314.2 billion won from the government proposal of 639.4 trillion won.
It marks the first time in three years that the budget was decreased by the parliament.
Next year’s budget includes 352.5 billion won for issuing local currency in a program championed by DP leader Lee Jae-myung, which was not included in the government’s initial proposal.
The budget for the police bureau at the Ministry of Interior and Safety and the personnel information management team at the Ministry of Justice was cut by half from 510 million won, one of major sticking issues between the rival parties.
The plenary session approved an amendment on cutting the corporate tax rate by 1 percentage point in each of the four tax brackets, which would bring the highest tax rate of 25 per cent down to 24 per cent.
When implemented, the upper cap of the corporate tax bracket will be lowered for the first time since 2017.
Rival parties also passed another amendment to postpone imposing taxes on income of more than 50 million won from investments in stocks, bonds and other financial products by two years to January 2025.
Until then, capital gains taxes will continue to apply only to major shareholders with shares worth at least 1 billion won per type of stock.
The tax law amendments came as the government is seeking ways to boost corporate investment and the stock market amid signs of economic slowdown.