Research Reports
A Study on Agricultural Tax Policy: Suggestions for Improvement
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AuthorKim, Meebok
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Publication Date2011.11.30
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Original
The purpose of this study was to review the agricultural tax system and to estimate the burden on farm households. Tax policies not only influence the financial well-being of farm households but can also have important effects on the number and size of farms, their organizational structure, and their use of land, labor, and capital inputs. Markets in agriculture are affected by tax policies as well.
There are several tax advantages in agriculture, such as exemption of agricultural income tax, exemption of VAT for non-processed foods, exemption of consumption tax on gas when it is used for agriculture, and exemption of a transfer income tax with conditions. The total amount of tax exemption for agriculture is 5.6 trillion won.
In this study, we reviewed detailed tax items related to agriculture in Chapter Ⅲ. Firstly, we categorized tax items into 'income related', 'property related', 'consumption related', and 'corporation related.' Secondly, several exclusive issues are presented. In Chapter Ⅳ, two issues are analyzed to estimate the tax incidence of farm households with Farm Household Economy Survey (2003~2009). We analyze two issues: VAT and agricultural income tax. Reviewing the circumstances, we show that a farm household will pay 440,000 won as their income tax. For VAT for non-processed agricultural products, we estimate that tax payer's burden ranges from 28,000 won to 3,000,000 won under various scenarios of a new tax system.
Finally, this study suggested several ways to improve the agricultural tax system including property tax, capital gains tax and the tax system for agricultural corporation.
Researchers: Meebok Kim, Soosuk Kim
Research period: 2011. 1. - 2011. 11.
E-mail address: mbkim@krei.re.kr
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