hankyoreh

It is hard to tighten up tax regulations once they have been relaxed. There will certainly be tax resistance, and politicians who have the authority to fix the tax code do not want to take the initiative for fear of what it will do to their votes. Problematic tax laws stay around for decades as a result, and tax reduction programs become embedded in the system over time even when the reasons they were introduced are long forgotten. The country is inevitably going to need more finances because of socioeconomic disparity and policies regarding the low birth rate and ageing, and the financial pressures just down the road are already apparent. The government will find it hard to win the people's agreement if it intends to collect more in taxes without fixing the many holes in the tax net.

The Hankyoreh and the People's Solidarity for Participatory Democracy (PSPD), through a joint series titled "Let's Change the Larger Framework of Taxation," have suggested ways to correct the problems in various areas of the tax code. The simplified tax (gani gwase) system is the root of inequality between "salarymen" and the self-employed, and it has long been the channel used by self-employed persons for evading taxes with no sense of guilt. The tax revenue lost yearly because of lax regulations on exemptions and reductions is now in the neighborhood of W20 trillion. Someone else has to pay when someone's taxes are reduced, and in many areas there is a problem of balance since the benefits usually go to the middle class and companies operating in the black. The "Comprehensive Financial Income Tax" is laxer than it was when the "Financial Real Names" program was introduced. Fixing these problems alone would make the tax burden more balanced and make the foundations of state finances considerably more sturdy.

A balanced tax burden and better redistribution of income are the larger principles and policy goals that should be pursued by the tax system. The state is avoiding responsibility for knowing the current framework goes against those concerns while still not fixing the problems. Making change for the better sometimes determines what happens to a sitting government, but the issue is one that can be postponed no longer. The government needs to bring together its political and bureaucratic strength before engaging the debate over tax increases and reductions.

The Hankyoreh, 31 January 2006.


[Translations by Seoul Selection]