Comprehensive Taxation System Not To Be Bound By Law

President-elect Roh Moo-hyun has recently made public his strong will to revamp the current tax code regarding gift and inheritance. He said, "During my term, I will introduce a new comprehensive gift and inheritance taxation system by all means. I will do it even if it requires changing interpretation of the Constitution."

In a debate session on the national agenda held on January 22, a government official with Ministry of Finance and Economy took issue of the constitutionality of the new system. Then, Roh replied, "I myself am a lawyer, having in-depth knowledge of the tax code. In my judgment, I don`t see any unconstitutionality lying in the system. Our Constitutional Court has strictly interpreted the scope of the tax code with regard to inheritance and gift. I think it`s wrong."

Roh`s remarks run direct counter to the Constitutional Court`s doctrine of "No tax without code." Under the doctrine, the court has demanded that bases for taxation should be unequivocally provided in statute. In addition, legal scholars and lawyers contend that the new system, if introduced, is likely to be found unconstitutional. Thus, in the process of codification, a heated debate is expected to follow.

Roh, taking the United States as example, reportedly said, "President Roosevelt once tried to straighten out the incorrect interpretations of the US Constitution by the US Supreme Court. Our people collectively want to revamp our Constitution. Interpretation of the Constitution is subject to change in accordance with social changes. Of course, decisions of the Constitutional Court can be changeable. Isn`t it?"

Roh also asserted, "Tax should be levied where the income exists. That`s what the law is about. In our country, able accountants and lawyers can team up together and evade taxation, taking advantage of the loophole."

In the meanwhile, Ministry of Finance officials has reported to the Presidential Transition Committee that it would set up, by the end of this year, a task force consisting of experts to introduce the comprehensive inheritance taxation system.

The system conceived by Roh allows tax authorities to levy tax once it is deemed that a person has in fact inherited an asset or received a gift. Therefore, it would be no longer necessary that the tax code should provide each and every element for taxation with regard to inheritance and gift.

Young-Hae Choi yhchoi65@donga.com