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Instead of providing emergency disaster funds to the nation’s population, the government proposed to fund the donations, but 4 out of 10 workers did not receive any benefits, even if they donated.
The government announced plans to grant tax credits (15%) for donations through the year-end settlement method if it announced that it would donate emergency funds to encourage donations. This means that if you donate 1 million won, you will be reimbursed 150,000 won by reducing the tax due.
However, for those who do not have the amount to pay, even if they donate, they will not receive a penny.
This is because neither the income deduction nor the tax credit are non-refundable and the deduction benefits are not returned unless you have to pay the tax. As of the year-end tax return in 2018, 77.2 million were subject to taxes from 1.588 million workers. Even if 4 out of 10 donate as ‘tax free’, they will still receive ‘0’ won. According to the family of four, people with a total annual salary of less than 383 million won are eligible. Two out of 10 self-employed people who pay a comprehensive income tax are tax free.
In particular, this non-refundable tax credit method is noted as ‘reverse discrimination’ for low-income families. Choi Hyun-soo, a researcher at the Korea Institute of Health and Social Affairs, said: “It is not reasonable for ordinary people who donate for people who are more difficult than me to receive no benefits because high-income families fully benefit from Noblesse Oblige’s tax deducted donation and they are socially conscious. “It is a contradictory situation.”
In addition, the government has initiated a law that considers that donations will be made if there is no separate request for 3 months. For low-income people, if this period is missed, you will not receive even 150,000 won.
As such, it is noted that a special tax credit is required for reimbursable donations, regardless of whether the tax is paid or not, such as the work incentive system. The refund type is a system that returns even if the tax payable (tax amount determined) is 0 won.
It is a problem raised in several places that the income deduction or tax credit incentive method does not work for low income people.
A typical example is pension savings. In recent years, pension savings in the low-income class continues to decline, and experts explain that after the introduction of the tax credit, there are no incentives to pay for pension savings because there is no tax credit to be repaid. in the case of low taxes.
“The donation is voluntary, and the government is concerned with providing incentives within the current legal system,” said the Ministry of Information and Communication. “There is no plan to provide additional benefits to donors, even if there is no income below the tax-free store.” Said.
However, the government does provide a 10-year transfer deduction for those who are temporarily below the tax-free store due to a temporary decrease in income this year due to the crown19.
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