IMF calls for overhaul of tax system

The International Monetary Fund has revealed that Korea needs an overhaul of its tax system for a simplified taxation policy to remedy the current excess in types of taxes and tax exemptions.

According to a government source on September 5, after the implementation of inspection in June under the financial transparency agreement, the IMF sent a draft of its findings to the Korean government in July stating that although financial transparency has been adequately raised, there remains the task of fixing the various areas such as the tax system, budget policy, financial information availability, tax payment service.

The IMF asserted that Korea needs to brush off its old biased practice concerning supplementary budget allocation, and there needs to be a major overhaul of funds that are not under the control of the National Assembly through such means as abolishment or budget inclusion.

Concerning the tax system and its administration, the IMF pointed out that the tax auditing and tax penalties by the authorities are self-willed and motivated, and there is a great lack of tax information for average taxpayers. The IMF stresses a overhaul of the system to a more simplified one.

In addition, the IMF recommended the abolition of the education tax and pointed out that a detailed accounting of the national pension fund and the amount of national guaranteed bonds were not included.

Kwon Soon-Hwal shkwon@donga.com