[Editorial] Don't Push Ahead With Soju Tax Increase

On Tuesday the cabinet approved a government-proposed increase on the tax for soju and whiskey to 90 percent, up from the current 72 percent. The ruling Uri Party is opposed to the increase, but the government pushed ahead with its original proposal. Now the proposed increase goes to the National Assembly to decide.

The proposal was not something that came all of a sudden. The liquor tax on beer was raised to 100 percent at the end of 2003, will be lowered to 72 percent in 2007. The government had warned that to make up for the difference in revenue it was going to raise the tax on soju and whiskey, which have higher percentages of alcohol. Whatever the course of events were, however, one wonders how ideal it is to raise the tax on soju when the economy is in such bad shape, because it means an increased burden for the common people (seomin).

The average Korean drank an average 86 bottles of soju last year. If the tax increase gets approved it will mean the factory prices rises by W97, and if you count the increase in the retail price that becomes no small rise in the burden for the common people. The government says that if the country wants to reduce the consumption of alcoholic drinks that contain high percentages of alcohol then those drinks need higher liquor taxes, but soju consumption continues to rise despite a higher tax enacted in 1999. Even if this latest increase is approved it will have little influence on how much soju is consumed.

When the taxes are changed the issue of balanced taxation always has to be taken into consideration, no matter how urgent the need for more tax revenue might be. These are times in which the income gap between classes continues to widen, so the priority should be to avoid increasing taxes that would be a burden for low-income groups and give various reductions and exemptions for high-income groups. The government needs to stop and think about whether the reason there is such public opposition to raising the soju tax is because this year's tax code reorganization does not reflect those principles. Even if it makes sense to raise the tax on soju over the long run, raising it right now exclusively for the sake of more tax revenue makes little sense.

The Hankyoreh, 21 September 2005.

[Translations by Seoul Selection (PMS)]