This report reviews the 2009 tax proposals that include raising the alternative corporate minimum tax rates, introducing the local consumption and income taxes by transferring 5 percent of value-added tax and the entire resident tax to the provincial governments, and many other issues. This is because the feeble economy that has yet to recover cannot be relied on generating as much tax revenue as needed.
Our analysis of the 2009 tax proposals indicates that:
- Withholding the planned corporate income tax cuts is desirable whereas the delay of the planned individual income tax cut is not. This is because the delay by two years of the planned corporate tax cut might hamper the investment.
- Raising the alternative corporate minimum tax rates is not consistent with the lowering the corporate income tax rates.
- The government should scrap the "temporary investment tax credit" by the end of this year, because it doesn't work in order to encourage investment into facilities.
- The current non-taxation and exemption laws should be modified since they are complicated and don't reflect their unique characteristics as policy tools.