Businessmen speak out against finance minister's push to tax reservesUpdated: 2014-07-22 22:03:00 KST
The combined cash reserves of Korea's ten largest conglomerates have doubled in just five years to 515 billion U.S. dollars -- that's 40-percent more than the government's budget for the whole of this year.
Finance Minister Choi Kyung-hwan believes businesses must use these huge sums of money to re-invest, increase dividend pay outs and boost salaries in order to revitalize the economy.
"We plan to devise measures so that corporate income can flow into households -- through investment, dividends or salaries."
The dividend rate, the amount per share an investor receives when the dividend is paid, is lower in Korea than it is in any other emerging market.
This means investors are getting lower returns as local companies stockpile their earnings.
The minister has been pushing to tax companies that cling on to huge reserves.
Businesses say the finance minister's plans would be akin to double taxation, stressing they plan to utilize the reserves in the future.
( : Korean)
"Companies think it's unfair to be taxed again after paying corporate taxes.
The reserves, in various assets like properties and other non-cash forms, are often used for investment down the road."
In their first meeting with the new finance minister on Tuesday, business leaders called for a more careful approach as there could be a number of unwanted side-effects to the plans.
They also called on Choi to push through reforms on deregulation.
Song Ji-sun, Arirang News.
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