[Editorial] Not Time to Raise Everyday Taxes

The tax revision bill to be submitted during the ordinary session of the National Assembly has been made public. It is very different from last year's proposal, which tried to reduce taxes for people living off their wages, the common people (seomin), and the middle class. There will be fewer non-taxable areas and benefits, and higher taxes for soju and liquid propane gas (LPG). You can already see how there is going to be a heavier tax burden for the common people and the middle class.

The reason the government is reorganizing the tax code in such as way is to increase tax revenue. It surely has to be concerned, since this year revenue is expected to be W4 trillion to W5 trillion short and there would be no basis for optimism about next year, either. In principle it is indeed desirable to make sense of a tax reduction regime that is to indiscriminate. But "timing" is critical when it comes to policy. One questions whether now is really the right time for this. Domestic consumption is not picking up and the economic disparity makes life difficult for the common people. It would be hard to approve of a plan to levy more taxes when things are difficult enough without them.

There is still a lot of small-scale tax evasion on personal income. While it wouldn't be easy, the government needs to work harder to expand its revenue by working harder to collect income tax. This is sad because it's as if the government is trying to go the easy way about making up for insufficient revenue, without trying to keep from increasing the tax burden for common people and the middle class until the economy recovers. The government's approach is also inappropriate if you consider the automatic process of adjustment on finances, in which you collect more taxes when the economy is good and less when it's bad.

You also have to consider how the people have feelings of tax resistance, even if much about that sentiment is the result of misrepresentations of the essence and influence of real estate policy. The government might incite more tax resistance. Policy that increases taxes has never been spoken well of when adopted at times of negative public sentiment. The government needs to find a way to mix policy masterfully, even if also so as to be able to concentrate more of its efforts on implementing real estate policy. There needs to be ample discussion at the National Assembly.

The Hankyoreh, 27 August 2005.

[Translations by Seoul Selection (PMS)]