Video from SBS:
Strange Tax Exemption Bill for ₩100 Million Transfer Towards Grandchild’s Education
Anchor: A bill has been proposed exempting from inheritance tax those who give up to ₩100 million in education to their grandchildren.
The bill is aimed at reducing the burden of education expenses for the middle class, and stimulating the stagnant economy.
But critics counter that the only beneficiary of the bill will be the well-off, sparking controversy.
Reporter Lim Chan-jong has more.
Reporter: Rep. Ryu Seong-geol of the ruling Saenuri Party initiated the bill to amend a tax break restriction law.
Under the bill, grandparents who give a maximum of ₩100 million for their grandchildren’s education will be exempted from paying inheritance tax. Lawmaker Lim claims that the bill will help revitalize the economy because the financial burden of education will decrease, and the consumption will increase.
Currently, giving up to ₩20 million to minor grandchildren is not subject to inheritance tax.
Mr. Ryu says that the bill requires all inherited money to be spent within four years of the transfer, but the money is banned from being used for private education. The prohibition will made under a presidential ordinance, the parliamentarian added.
But opponents say that only a fraction of people can afford to transfer ₩100 million in education to a grandchild, so the bill will likely give preferential treatment to the wealthy.
If a grandparent has ten grandchildren, he or she can transfer a total of ₩1 billion maximum to them under the bill.
Director of Participation Alliance Shin Won-gi: The bill permitting the transfer of wealth from grandparents to grandchildren without taxation will bring about adverse effects, including disrupting the tax code for inheritance.
Reporter: Also contentious is where the transferred money goes.
If a tax break granted for an amount of ₩100 million is to be used for education with a time restriction of four years, which is ₩25 million per year, the money will likely be used to send children overseas to study.
Saenuri Party Rep. Kim Kwan-young: The annual cap of ₩25 million was determined by looking at prices of overseas private schools, meaning inherited money from grandparents will flow into foreign countries, a far cry from boosting the economy as the bill’s initiator claims.
Reporter: The bill comes amidst the controversy over the government’s back-to-back announcements to increase taxes, (including those for cigarettes, cars, and residents), intensifying the controversy over tax policy.
Comments from Naver:
cswo****:
What is the Saenuri Party doing?
ryu6****[Responding to cswo****]:
Didn’t you know [the Saenuri Party] was made up of these kinds of people? I guess you didn’t. So you took a shot? keke Now you feel the result of your precious vote.
nhy3****:
If not in private education, how else you can spend ₩100 million in four years? Private kindergarten, private elementary school, private high school, medical school, graduate school, law school? Studying abroad? You can probably spend that much.
kgs4****:
Wow…they’re not doing what they should be. They are wasting time on something irrelevant.
rtw1****:
Is this the kind of public polices they said they couldn’t pass because they were busy dealing with the Sewol ferry incident?
drea****:
Can grandparents in the middle class afford to give ₩100 million in education expenses? What country are we talking about here?
dydw****:
Are the politicians going crazy to give money to their grandkids?
ltk1****:
Korean laws seem to be very convenient for rich people.
gura****:
The damn Saenuri Party is in its own class haha
froz****:
Cigarette prices are increasing and gift taxes are decreasing…it’s paradise for rich people! Then, are those who voted for the Saenuri rich people who can readily give ₩100 million won to their grandkids?!
youn****:
I’m at a loss for words. It’s a crazy policy. What a crazy Saenuri Party.
gk58****:
They keep on doing it, and it’s going too far.
fooc****:
keke Aigoo what percent of elderly people can afford to give their grandkids ₩100 million?
osd7****:
They wrote a freaking novel, keke
hyok****:
Haha what a cheerful barking noise in a while.
Minjun Chen contributed to this article.
