Tax-exempt savings draw attention over new tax plan

SEOUL, July 4 (Yonhap) -- Tax-exempt savings products are expected to gain popularity as the government is considering levying more taxes on people with sizable financial incomes, analysts said Wednesday.

On Tuesday, a presidential panel on fiscal reform proposed that the threshold for comprehensive financial income taxation be lowered to 10 million won (US$8,970) from the current 20 million as part of efforts to collect more taxes from the country's rich. It also calls for higher taxes on owners of expensive property.

If the plan is implemented after parliament approves the revision, around 310,000 people will be affected. Compared with the taxation rate of 15.4 percent, the figure would go as high as 42 percent.

"Those subject to the new taxation scheme are advised to buy tax-free or tax-saving products, such as an individual savings account and individual retirement pension," said Lee Won-hyoo, an official at KEB Hana Bank.

"Customers are advised to deposit money for a shorter duration to limit their income from interest," said KB Kookmin Bank expert Kim Hyun-sik.

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