Following the passage of a supplementary budget bill, the government and the ruling party are now pushing for a tax hike.
The ruling camp says a social consensus has been formed on levying reasonable tax rates on the super wealthy, while the opposition is in protest saying it will dampen corporate activity.
Ruling Democratic Party (DP) Chairwoman Choo Mi-ae was the first to propose higher taxes earlier this month. The DP and the government have echoed the call.
The government and the ruling party agreed on a tax reform plan during a meeting Thursday which is known to include taxing the wealthy. Finance Minister Kim Dong-yeon said the government will seek tax reforms with a focus on creating jobs and redistribution of income.
One tax hike plan under consideration is to create a new standard of assessment for large firms whose earnings exceed 200 billion won in order to slap them with a 25% corporate tax bill.
The income tax rate for the highest income earners making more than 500 million won a year could also be raised from 40 to 42 percent. The Democratic Party says this will have the effect of increasing tax revenue by 2.9 trillion won each year.
According to 2015 data, the highest income earners in this bracket numbered 20- thousand-460, while fewer than 200 firms earn over 200 billion won each business year.
Raising taxes on the wealthy has emerged as a way to secure funds to implement the Moon administration's key policy goals. It is estimated that it will cost 178 trillion won over the next five years to carry out the 100 priority policy tasks finalized by the government.
The president's advisory panel said that over 83 trillion won of this will be funded through expanded tax revenue, while the remainder will be sought through reductions in expenditure.
The ruling camp says that over 99 percent of businesses and individuals will remain unaffected by the tax hike as it only targets the super-rich.
The ruling party is set to push ahead with the tax plan based on President Moon's high approval rating. It also cites opinion polls showing that over 85 percent of the public support taxing the wealthy.
The DP says a social consensus has been formed. However opposition parties all protest a tax hike.
The conservative Liberty Korea Party strongly blasted the move, describing it as a “tax bomb” and “tax extortion.” The People's Party also claimed a tax hike should be the very last resort and based on pubic consent. It said that it's asking too much of large firms to pay more taxes while they are also expected to increase employment and investment.