[Editorial] Go for Another Budget Plan Instead of Excessive Taxing

At the ministerial meeting presided by President Roh Moo-hyun yesterday, the government decided to raise the alcohol tax on soju from 72 percent of the current store price to 90 percent. As for the special excise tax on Liquefied Natural Gas (LNG), it decided to increase the figure by 50 percent from the original version of the taxation amendment. Finance and Economy Minister Han Duck-soo said, “It was to reduce hard liquor consumption for the sake of the public health.” If so, will the tax increase for LNG used for heating and cooking be presumably to “encourage people to eat raw food to boost their health?” People would think that lower taxes to lift their burden would do more good to their health than being discouraged from drinking soju with higher taxes.

Increases in soju tax are only a part of “tax squeezing.” From next year, there will be a significant cut in income deduction at year’s end, and various tax-free systems such as tax breaks would mostly be abolished, which would in turn overburden salary workers. There will be no tax benefits to small-and-medium sized companies in the metropolitan area. Major corporations, successful in management, suffer from massive tax probes merely because they are in the black.

Tax revenues would face a more severe shortage as the public will suffer from paying more tax. Lack of tax revenues is a result of the government’s overspending habits, leading to a weakening of the tax base. The Uri Party, afraid of the public’s anger, suggested the government’s stock ownership and purchasing of the nation-owned land instead of the increase in soju tax, but still the money comes from people’s pockets anyway.

The land reparation fees as a result of reckless regional development projects show an increase from 14 trillion won last year to 18 trillion won. Overall yearly taxes from the public would amount to tens of trillions of won, which are to be spent for consumption-oriented distribution regardless of expanding the growth potential. Harsh collection of taxes to compensate for that in turn invited a weakening of private consumption and corporate investment.

Only by reducing the tax burden can the chronic problem of a lack of tax revenues be prevented. By bringing in resilience in private sectors, the tax base will be strengthened. In that case, the government would be able to reduce its debts and expand the tax base. The National Assembly needs to realign reasonably the government’s budget for next year in consideration of the public suffering from tax burdens as it aims to achieve growth and distribution concurrently. Various pet projects and inefficient expenditures are to be significantly reduced.