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[Editorial] Rising Consumer Prices, Rising Oil Prices, Rising Taxes, and the Falling Economy

[Editorial] Rising Consumer Prices, Rising Oil Prices, Rising Taxes, and the Falling Economy

Posted August. 05, 2004 22:15,   


While the economic life of the majority of the public is getting tougher and tougher, neither the government nor politicians offer the belief that hope is around the corner. Rather, they are squandering their energy on issues that are not even remotely related to the public’s livelihood. Public suspicions are rampant that the system of sustained economic growth is now on shaky ground. This political picture has further hurt investor confidence at home and abroad. Concerns are so widespread that money is out there, but hardly circulates.

To add insult to injury, consumer and oil prices are skyrocketing. So are taxes. For the first time in the past 14 months, consumer prices went up by about four percent this month, compared with the year earlier period. The cost-of-living index, the gauge of out-of-pocket expenses, has reached a 35-month high. The price of Dubai oil, which makes up 70 percent of the country’s oil imports, has risen by $3 since it reached a 14-year high on May 7. What worries us are the adverse effects of rising oil prices on economic growth, consumer prices, and exports.

Nevertheless, the government and the ruling party are failing to give confidence to the public over its projections, policy-making, and its policy priority. They are busy with raising taxes as if they turned deaf ears to taxpayers’ outcries. Increases in property taxes are typical. Since they drastically increased the burden on property owners, who have little to do with real-estate speculation, tax evasion is bound to happen. The opposition party cannot rise above criticism, either. It will take about six trillion won in additional budget funds to enact new bills passed at the 17th National Assembly. Since their bills for tax reductions will benefit a limited sector of society exclusively, they actually amount to increases in public spending. It will be the ordinary taxpayers who will make up for the budget shortfalls

Except for exports, economic indexes are rarely published without reference to “months’ worst.” Now even exports show signs of a slowdown. There is nothing strange about the plunging of the consumer expectations index, the measure of consumers’ six-month prospects, to a 43-month low. The consumer index is currently at a nine-month low. We are concerned that the public has begun to get completely demoralized after worrying about the recession, which seems to have no end.

The government and politicians should bet everything on turning around the economy and public livelihood before the last light of hope is completely snuffed out. However, spending public money after borrowing and increasing taxes will adversely, not positively, affect the vitality of the economy. What is urgent is the need to strengthen law and order and get rid of regulations that discourage individual creativity and investor confidence. Most of all, to shake public distrust, the government should prove itself in practice that it will safeguard the free-market economy.