Finance minister defends government's tax revisionUpdated: 2014-08-08 06:29:42 KST
Finance Minister Choi Kyung-hwan defended the government's tax revision on conglomerates, dismissing criticism that the new changes would benefit only the heads of the country's biggest companies.
Choi said the proposal is intended to encourage conglomerates to use their cash reserves in ways that would benefit the economy.
He said the plan is to boost domestic demand and create a virtuous cycle, in which capital flows into households as a result of conglomerates making investments, paying out dividends and raising the wages of their employees.
Choi says the main reason for the country's sluggish domestic consumption was because household income slowed to a standstill compared to corporate income.
Between 2008 and 2013, disposable income among households increased about 30-percent, compared to more than 80-percent among companies.
In the bank, the combined cash reserves among companies totaled around 460-billion U.S. dollars in June, a 44-percent increase from 2010.
The finance minister stressed the need to induce structural changes in order to get the Korean economy back on track.
The country's gross domestic product increased a mere zero.six-percent in the second quarter of the year, from the previous quarter, marking its lowest level in three quarters.
Kim Ji-yeon, Arirang News.
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