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Low-Income Earners to Enjoy More Tax Benefits, Job Opportunities
The government on Wednesday announced a set of measures to increase job opportunities for the poor and expand the social safety net.
The Presidential Committee on Social Inclusion presented the measures to a committee meeting attended by the prime minister and the ministers for labor, health and welfare, and finance and the economy.
``While the number of `the working poor,' those who still have difficulties in making a living even though they are working, has increased to 1.3 million, the nation does not have a proper welfare network for them,'' the committee said in a written announcement.
To increase the income of the working poor, the government will consider introducing earned income tax credit (EITC) to provide them with financial support through tax benefits.
The EITC is an income tax support package whereby the government supplements the income of those who earn less than the minimum cost of living.
The system is designed to not only prop up their income but also increase the level of financial support if the person earns more while remaining in the low-income bracket.
This system, implemented in Britain, Australia and the U.S., can support the poor while encouraging them to work at the same time.
For example, if a worker's real tax payments amount to 800,000 won and his tax deduction stands at 1.5 million won for the year-end tax adjustment, he or she will be able to get the difference, or 700,000 won, in financial support from the government under the envisaged tax credit program.
As it is difficult to assess the earnings of those with low incomes and the introduction of the EITC will require many changes in the tax system, the authorities will determine the details of its implementation by 2005.
The government also plans to create 50,000 jobs per year by 2008 using some 1 trillion won. The jobs are to be created in the social service areas, which, while important, are yet to see full implementation due to low profitability. These jobs include nurses and those collecting and selling recyclable products.
The authorities will also provide medical allowances to children, the elderly and the disabled in low-income brackets gaining less than 120 percent of the minimum cost of living and who have not benefited from other government subsidies by 2008.
These people will also be able to receive medical and educational allowances for an additional two years once their earnings exceed the minimum cost of living.