[Editorial] Consistency in the Greatest Amount of Tax Penalty in History

The NTS’s tax investigation, imposing the 505.6 billion won of tax penalty on the 23 media companies, 24.2 billion won of surcharge for the unfair inner trade on the 13 media companies, and the revival of the newspaper directives were all done within few days. Emphasizing the necessity and the validity of these measures, the government said that everything was in accordance with the law. However, it has no precedent that such harsh measures have been taken to the media companies simultaneously. Taken into consideration the time, method, and the amount of tax penalty and surcharge, these cannot be viewed usual and untainted measures. Soon after President Kim emphasized the media reform, the tax probe was launched in a full scale. Too many human resources (1000) were mobilized for the investigation of the medium- and small size media companies for four months after one extension.

505.6 billion won of tax penalty is the greatest amount imposed on a single category of business in history. Taken into consideration the annual selling prices of the media companies, which are equivalent to the medium- and small size companies, the amount of tax penalty goes against the principle of equity. This may dismantle the existence of the media companies itself. The amount of tax penalty can be estimated by the comparison with other companies. For instance, 136.1 billion won was imposed on the Hyundae in 1991 with which the amount of selling of the media companies cannot be compared. 79.3 billion won was imposed on Pohang Iron Company in 1993. It is questionable as to whether the method of imposing of tax penalty was intended to inflate the amount. The NTS collected 68.8 billion won under the rational that if the distribution of free copies, which was being done customarily, exceeded 20 percent of those printed, it was defined as the entertainment fees which were subject to the tax penalty. To have publicized the amount of tax penalty, the size and type of the omission of profits is a violation of the National tax law. Moreover, to say that the government will indict 6-7 companies when the course of the indictment has not been confirmed or to give impression to the public that the owners are suspected of corruption cannot but be a politically intended announcement.

It is unusual for the FTC to have imposed 12 billion won, a half of the surcharge (24.2 billion won) for the unfair inner trade, to the three major newspaper companies (Donga, Chosun, and Joongang). Of course, the media companies are not a consecrated ground. If they evaded the taxes, it should be charged. If there were wrongdoings, they should be indicted. However, it is difficult to understand current incidents. We expect that it will be clearly revealed how such harsh measures have been taken under which intentions. We will continue to watch.