South Korea's top economic policymaker sounded caution Thursday against raising corporate taxes, warning it could cause capital outflow and thwart economic recovery.
  

Speaking at a National Assembly interpellation session, Choi Kyung-hwan stressed it would be ill-advised for South Korea to mark up tax rates when other countries are doing the opposite.
  

"Raising corporate taxes can potentially lead to a slowdown in the economic recovery," the finance minister told lawmakers. Slower growth can lead to less taxes being collected, which would hurt the government's ability to meet growing expenditure requirements.
  

He pointed out that since 2008, 14 countries in the Organization for Economic Cooperation and Development lowered corporate taxes, with 13 remaining unchanged and only six marking up the rates. Choi said the six that raised rates were those now in financial trouble like Greece and Mexico, and that no country that posted growth opted for a hike.
  

South Korea's corporate tax rate for large companies is 22 percent and 11 percent for small firms.
  

Choi, who doubles as deputy prime minister, said instead of raising corporate taxes, more effort should be placed on streamlining the various tax exemptions given to big companies that can effectively result in more revenue for the state.
  

Corporate taxes became a central issue after the government took flak for burdening individuals to cover greater welfare expenses while refraining from raising the rate for companies.
  

Both ruling and opposition parties have called for talks on changing the tax rates to better meet the growing welfare expenditure, but the government has been adverse to such calls. President Park Geun-hye, in particular, made clear that the government should first make full efforts to expand the country's tax base by ferreting out people and businesses that do not pay their dues and cut back unnecessary spending before talking about any tax raise.
  

This view was repeated by Choi who said that raising taxes must be a last resort.
  

Choi said earlier in the day that policymakers are planning to introduce measures that will drastically reform the way state subsidies are given and keep closer tabs on public companies that in the past have been cited for lax management.
  

He said that while South Korea's welfare-related spending fell short of OECD standards, it will grow in time, and there is a need to exercise restraint in introducing additional measures that can strain the country's ability to meet expenditure.
  

Besides taxes and spending, the finance minister said South Korea needs to rely more on its domestic market for growth instead of on exports.
  

"Current policy focus is aimed at finding a balance between exports and the domestic market," he emphasized.
  

On Park administration's push for growth, Choi conceded that results so far are not up to expectations, but insisted that things are getting better.
  

"Last year, the country was rocked by the Sewol ferry disaster, but there are now signs of some improvement," he claimed.
  

The sinking of the ferry off the country's southeastern coast in April left some 300 people dead, mostly high school students who were on an excursion. The fatal incident caused consumer spending to nosedive last year, which affected other parts of the economy. In 2014, the country is estimated to have grown 3.3 percent. This is better than 3 percent growth in 2013 but well shy of earlier forecasts of 4.1 percent growth. (Yonhap)