[Editorial] GNP's Contradictory Call for a Tax Cut

The Grand National Party (GNP) is the subject of controversy for deciding to pursue a tax cut to the tune of almost W9 trillion. The gist of its proposal is to reduce once again the income and corporation tax rates that were reduced last year as well. It says it wants to ignore the government's tax reform proposal, which sought to do things like lower the gas tax and raise the soju tax. The GNP's proposal is most irregular and is hard to understand for coming at a time when insufficient tax revenue has led the government to decide to issue W9 trillion in bonds next year.

If taxes are cut along the lines of what the GNP is calling for the money the country will have to deal with rises to W18 trillion. It is inconsistent for the GNP to say it wants to increase the debt since it has long stressed the need for sound government finances. It says that all you have to do is reduce unnecessary spending. That's true, but where would you ever find spending that could be done away with on that kind of scale? A responsible approach on the part of the GNP would be to start by issuing a series of concrete proposals on what spending should be cut.

The GNP's tax cut is clearly something for those of high income and a minority of conglomerates. Half of all laborers and self-employed persons pay no income tax. Reducing income tax largely benefits people in the high-income bracket, more so than the common people. 221 conglomerates with big earnings pay for 62 percent of the country's corporation tax, so if the tax rate on that is lowered it mostly benefits a minority of conglomerates. It is deception on the part of the GNP to say it wants this tax cut so as to "reduce the tax burden for the common people" when the common people would enjoy few benefits.

There is no need to repeat the statement that taxes should be used efficiently. What is also important, however, is the stable acquisition of tax revenue, because ultimately it is the people who must bear the burden of the national debt. The GNP has a considerable degree of responsibility for the current lack of adequate tax revenue for initiating a cut last year. The right order to go about the tax issue would be to discuss the expansion of the tax base by mending tax exemption and reduction programs that hurt balanced taxation.

The Hankyoreh, 6 October 2005.

[Translations by Seoul Selection (PMS)]