Tax row looms large as Korean President enters 3rd year

Tax row looms large as Korean President enters 3rd year
President Park Geun-hye.

President Park Geun-hye will mark the start of her third year in office Wednesday overshadowed by political scandals, raging tax disputes and little progress on her pet policies of forging trust with North Korea and kicking off a "creative economy."

Analysts say that, already beset by talk of lame duck status, Park must focus on making her policies a reality this year.

But contradictory tax policies and debates over constitutional reforms threaten to derail Park's proposed economic restructuring reforms.

Many of Park's initiatives were initially welcomed by the public. Her catchphrase during the 2012 presidential race, "welfare without taxation," received particular applause.

Support for her proposed reform of the national pension for retired civil servants has also been high.

Multiple polls dating back to last September have shown public support for the pension reforms ranging from 60 to 80 per cent.

Pension reforms could save the government up to 55 trillion won (S$67.3 billion), government statistics show. Park has said that money could be used to finance her welfare policies.

Scandals involving Park's top aides and former National Intelligence Service chief Won Sei-hoon have dominated debates in the National Assembly, though, impeding moves to discuss and legislate Park's proposed reforms.

Park aides were accused of monopolizing access to the president, to the frustration of top Cabinet officials. Won is accused of having illegally swayed public opinion in the weeks leading up to the 2012 election by posting online comments.

The tobacco tax hike last December likewise hindered Park's reforms by sparking a public uproar against her government, as the policy appeared to go against Park's pledges to increase welfare without increasing taxes.

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