Lawmakers agree on 2023 budget to be put for vote at Parliament

Park Hong-keun, floor leader of the main opposition Democratic Party and Joo Ho-young, floor leader of the ruling People Power Party on Dec. 22. [Photo by Yonhap]

South Korea’s ruling and opposition parties on Thursday agreed on a tentative budget deal for next year, which includes a 1 percentage point cut in corporate tax rate, after missing the legal deadline on Dec. 2.

Joo Ho-young, floor leader of the ruling People Power Party (PPP) and Park Hong-keun, floor leader of the main opposition Democratic Party (DP), announced the agreement on Thursday at the National Assembly in Yeouido, Seoul. The parties decided to slash budget by 4.6 trillion won ($3.6 billion) from government’s proposed 639 trillion won and decided not to increase the national debt and government bonds beyond the administration’s proposal.

Under the agreement, the PPP and DP decided to cut corporate tax rate by 1 percentage point in all tax brackets. The offer was first made by the ruling party and was accepted by the opposition.

Initially, the Yoon Suk-yeol government proposed to lower the highest tax rate to 22 percent from 25 percent. The main opposition party, however, accepted a deal proposed by National Assembly Speaker Kim Jin-pyo to slash the maximum rate by 1 percentage point. The two parties in the end agreed on a deal to lower the rate in all tax brackets by 1 percentage point.

Tax rate for corporations with taxable income of 200 million won is currently set at 10 percent, 200 million won~20 billion won at 20 percent, 20 billion won~30 billion won at 22 percent, and over 30 billion won at 25 percent.

The two parties also agreed to cut 50 percent of the 500 million won budget set for the police bureau at the Ministry of Public Administration and Security and personnel information management team at the Ministry of Justice. National Assembly Speaker Kim proposed last week that the budget be excluded and instead be used from reserve funds. The ruling party was not happy with the proposal given the Yoon government’s policies regarding police independence and received consent from the main opposition party on the budget.

Real estate tax will be levied on multiple homeowners whose entire property value exceeds 900 million won while one homeowner whose value exceeds 1.2 billion won. Basic tax rate will be applied to those with up to two houses.

A parliamentary plenary meeting, in the meantime, will be held Friday to pass next year’s budget bill.