Gov't to allow tax deductions for public pensions

Starting next year, workers with an annual income of over 45 million won will be allowed a 5% tax deduction. Moreover, the limit on tax deductions for medical expenses will be increased from 2 million won to 3 million won.

In addition, tax deductions for national pension, civil servants pension, teachers pension, military pension and other public pensions will begin with 50% of the amount paid to be deducted from 2001 and the whole amount from 2002.

At the cabinet meeting with president Kim Dae-Jung in Chong Wa Dae on Tuesday, the government voted on amendments to tax laws governing income, special consumption, transportation, education, limitation on tax exemptions and 13 others to be submitted to the National Assembly.

According to the amendments to the tax law, the period of education tax levied on transportation tax for securing education budgets will extend from the end of 2000 as originally planned to the end of 2005. Moreover, special consumption tax levied on diesel oil, kerosene and butane gas will be gradually raised from next year to 2006, and the tax will be levied for crude oil.

On the other hand, expiring tax beneficial deposits such as workers preferential savings will extend from the end of this year to the end of 2002. Moreover, divined income from employee stock will be tax deductible if held for over two years.

Moreover, a 10% tax deduction will be allowed for gains on realty-transfer income from transferring real estate owned for over a year or acquiring new real estate from a construction company within this month to the end of next year.

Kim Young-Sik spear@donga.com