[Editorial] Before Increasing the Tax Burden…

The government appears to have decided on a financial policy that requires greater tax revenue. In his New Year's address later this week, President Roh Moo Hyun is expected to express his intention to increase the tax burden over the long term. The Ministry of Finance and Economy is expected to announce a plan for expanding the tax base in mid-February. Those who have been calling for tax reductions and by their nature refuse to accept policy that seeks wealth distribution are quite upset, but the choice is an unavoidable one.

Korea has outrageously low welfare expenditures compared to advanced nations, and the demand will only grow as the country attempts to tackle issues such as social disparity, ageing, and the low birth rate, and as it tries to develop its growth potential and prepare for reunification. More spending is essential for sustainable development.

Right now, however, the country's finances are in the red and government debt exceeds W200 trillion. It is an either-or choice. Either put up with more taxes, or work hard to close our eyes to the problems and pass the burden on to our children. The latter would not be the right choice.

Nevertheless, the government has an obligation to keep the people's tax burden to a minimum. If it first sets revenue goals and then tries to make expenditures fit that, the government could face massive tax resistance. It must work to increase balanced taxation and thereby increase revenue to the greatest extent possible without additional burden for the common people, and also be as sparing with expenditures as possible.

Most important is fixing the way the tax system is administered. No one will want to pay more in taxes if those who are dutifully paying their share are seen as fools. Those who underreport their income need to be pursued and there has to be accurate taxation of high-income earning professionals and the self-employed, and on income from personal property. In addition, there also needs to be reform in the government and of its finances. Bureaucrats naturally want their departments to have bigger expenditures. The government needs to be able to convince the country that it will weed out inefficient spending and that it is using people's taxes properly. If it tries to increase spending without visible effort in that area, no one in the country is going to cooperate.

The Hankyoreh, 16 January 2006.

[Translations by Seoul Selection]