By Lee Hyo-sik
Staff Reporter



South Koreans are expected to pay 3.56 million won ($3,460) per person in national and local taxes next year as the government plans to spend more to build a better social safety net and bolster the country’s growth potential.

The 2006 per-capita tax burden is forecast to increase by 7.2 percent, or 240,000 won, from 3.32 million won projected for this year, according to the Ministry of Finance and Economy Tuesday.

The government set its 2006 budget at 221.4 trillion won, up 6.5 percent from this year, as it plans to implement a wide range of social welfare programs and boost the nation’s growth potential, the Ministry of Planning and Budget said.

``More money will be spent to foster research and development (R&D) activities, improve the livelihood of low-income brackets and build a better social welfare system,’’ the Planning and Budget Minister Byoen Yang-kyoon said.

The general account budget will jump to 145.7 trillion won, up 8.4 percent from this year, while the budget for 22 special accounts and 61 state-run funds will increase 4.7 percent to 105.9 trillion won.

The budget proposal is based on the expectation that the economy will grow by 5 percent in 2006 with the won-dollar exchange rate at 1,010 won per dollar on average, according to the ministry.

The proposal, finalized at a Cabinet meeting held at the government complex in central Seoul yesterday, will be submitted to the National Assembly for approval on Sept. 30.

The plan stipulates that to boost the nation’s economic growth potential, the government will increase spending on R&D projects in the field of science and technology by 8.2 percent to 7.3 trillion won in 2006 from this year.

The country’s tax revenue from a number of general and special accounts will total 136 trillion won next year, up 7.3 percent or 9.4 trillion won from 126.6 trillion won this year.

Revenue from general accounts will jump 4.3 percent to 130.4 trillion won in 2006 from this year, while that from special accounts is expected to edge up 0.1 percent to 5.6 trillion won.

Defense spending is expected to rise by 9.8 percent to 22.9 trillion won next year for improvements in self-defense capabilities, while about 17.2 trillion won will be budgeted to improve the living conditions of the poor, who have been affected most by the stagnant economy, and reinforce environment conservation efforts.

The ministry predicts that its fiscal deficit will rise to 11.7 trillion won in 2006, up 3.5 trillion won from this year’s estimated shortfall of 7.2 trillion won due mainly to 9 trillion won in the planned issuance of state bonds to make up for a reduction in tax revenues and an increase in debt payments. The deficit is equivalent to 1.3 percent of the projected 2006 gross domestic product, it said.

leehs@koreatimes.co.kr