Tax Burden Ratio Higher than Japan

Three was a report that Korea`s tax burden ratio was higher than that of the U.S. and Japan.

The nation`s tax burden ratio was 22.7 percent and the public`s tax burden ratio was 28 percent according to a report on the review of the 2002 revenue and expenditure of the Ministry of Finance and Economy, submitted Tuesday by Lee Han-hyu to the Finance and Economy Committee of the National Assembly.

The numbers are higher than that of Japan (17.2 percent and 27.1 percent, respectively), nearing that of the U.S. (22.7 percent and 29.6 percent, respectively).

The tax burden ratio refers to the proportion of taxes to the gross domestic product (GCP) while the public`s tax burden ratio refers to the proportion of taxes and social security contributions to GDP.

In addition, the report pointed out that if 102 types of contributions, so-called quasi-taxes, are included, the real tax burden ratios jump to 24.0 percent and 29.2 percent, respectively.

The report also stressed an analysis, which says that the nation`s tax burden ratios are not very high considering the average tax burden ratio of the OECD member countries was 28.0 percent and the average of the public`s tax burden ratio was 37.5 percent in 2000, was wrong.

“Apart from quasi-taxes, the burden of the social security contributions including health insurance, which was less than one third of that of the U.S. and Japan, is recently increasing and the government should raise 77 trillion won to pay for bonds issued for public funds. Therefore, the tax burden ratio and the public`s tax burden ratio are already at a high level,” Lee added.

Yong-Ki Kim ykim@donga.com