Finance Minister Choi Kyung-hwan dismissed claims that easing taxes on dividend income would only benefit the owners of large conglomerates, saying that it would be helpful for the overall economy.

The government proposed a set of tax code revisions on Wednesday, including lowering the tax rates on dividend income from 14 percent to 9 percent. The move is intended to encourage companies to increase dividend payouts and induce money flows from companies to small shareholders.

But critics charge that such a move will allow owners of large conglomerates, also known as chaebols, to avoid paying a large amount of taxes on their dividend income, while the benefit for small shareholders will not be as significant as expected.

“That is not the case at all,” Choi said during TV appearances after announcing the tax code revisions. “If (owners of conglomerates) want to rake in 10 billion won ($9.8 million) in income, they have to increase dividends by trillions of won. They can take the 10 billion won, but the trillions of won will end up being unloaded into the economy.”

Choi also emphasized the importance of government efforts to channel the corporate money stream into households. The tax code revisions include levying taxes on excessive corporate cash reserves in order to encourage businesses to spend the money more on investment and salaries for their workers.

“Since 2008, the corporate tax rates have declined from 25 percent to 22 percent, but some say that the impact (on the economy) has fallen short of expectations,” he said. “We concluded that our economy will not operate if we fail to help corporate income stream into households. (Yonhap)