[Editorial] Bureaucrats Are Hurting the Economy

President Roh Moo-hyun’s New Year’s address to the nation contained the phrase, “Financial resources need to be increased to resolve socio-economic divides.” This triggered some economic agencies into “loyal action,” and the speech also led to confusion and misunderstandings in the market.

When Roh’s speeches themselves are considered controversial, it is no surprise that his hastily-organized policies could hurt the economy.

Deputy Minister for Finance and Economy Park Byung-won said in a radio interview three days ago, “Taxes on beer were reduced, but whiskey and soju taxes were not raised, so financial resources cannot be guaranteed,” adding, “Through public hearings or other means, [the public] should be persuaded [to pay higher taxes for soju.]” This remark was made less than two months after the government’s bill for a soju tax raise was nullified. Even the Uri Party refuted this, saying, “No review has been made,” and the Ministry of Finance and Economy backed down later that afternoon, less than day removed from Park’s remarks, saying, “As of now, tax raises are not being reviewed; it was Deputy Minister Park’s mid-to-long-term policy objective.”

It is regrettable that the “core ministry” regarding the government’s economic policies made such a remark without much thinking, reversing it less than a day later.

The National Tax Service (NTS) said on January 18, the day when Roh gave his New Year’s address to the nation, “Out of major corporations with sales volumes of more than 30 billion won, nationwide concurrent tax probes will be conducted for 116 companies alleged to have paid small amounts of taxes.” The NTS argued that it did not intend to go along with the government’s “codes,” but it is rare for the agency to launch those kinds of probes and publicly announce them at the same time.

Some companies responded, saying, “Squeezing more taxes has been expected.” The shock was immediately reflected in the securities market, and the companies on the list of tax probe targets were the ones hardest hit. Lee Ju-sung, the NTS head, stepped back, saying three days ago amid greater repercussions, “If the series of tax probes affects stock prices, timelines may be adjusted.”

This is a classic example of the government’s reckless and irresponsible “just-do-it-and-handle-it-later” approach.

Roh’s remark on socio-economic divides is being criticized for its possible “political intentions.” Economic agencies are supposed to thoroughly refine economic polices while taking the problems with the president’s remarks into consideration, but in fact, they are busy showing their loyalty to him as they are quick to do as he says. A government like this stifles the economy. It’s very regrettable.