The National Assembly on Wednesday passed a package of measures aimed at bolstering the country’s weak tax revenues and improving fiscal balance by imposing more taxes on high-income earners and major conglomerates.

Facing a tight Wednesday deadline, the ruling and opposition lawmakers agreed to legislate the package that included levying a 38 percent tax on individuals who earn more than 150 million won ($142,000) a year. Korea previously applied the tax rate on the rich with an annual income of more than 300 million won.

About 124,000 more individuals will be categorized in the high-income group under the passed tax revision, resulting in approximately 350 billion won in increased tax revenue, according to the Ministry of Strategy and Finance.

The National Assembly also passed a bill to raise its minimum corporate tax rate from 16 percent to 17 percent, as well as the 2014 budget of 355.8 trillion won, down about 1.9 trillion won from the incumbent government’s initial proposal.

The ministry also expects to see an increased tax revenue of up to 300 billon won a year by raising its corporate taxes on conglomerates with earnings of more than 100 billion won a year.

This marked the first tax increase under the Park Geun-hye administration, despite her election pledge that there would be no tax hikes. The president seemed to have no choice as the government needs to increase its welfare spending amid a shortfall in tax revenue.

The country’s total debt-to-GDP ratio reached 36.3 percent in 2013, but is expected to rise to 37.3 percent, mainly due to the government’s supplementary budget, according to data from the Bank of Korea.

The administration plans to secure an additional 135 trillion won over the next four years to finance President Park’s welfare and other costly policies until she completes her term in early 2018.

Tax hikes on the rich and conglomerates will likely face criticism as experts pointed that the increased corporate tax, which will affect more than 240 major companies, will not only dampen domestic investment but also foreign investment.

Meanwhile, the National Assembly also passed a separate bill to ease the real estate purchasing tax in an effort to revive the country’s slow housing market.

Previously, multiple homeowners had to pay capital gains taxes of 50 to 60 percent, but the revised law drops that to 35 percent of their gains from apartment sales.

By Oh Kyu-wook (596story@heraldcorp.com)