[Opinion] Economic Growth Dividends

When a corporation generates profits, shareholders receive dividends. According to the Korea Exchange (KRX), of the 580 corporations that closed their accounts in December, 169 gave out dividends amounting to 6.23 trillion won this year.

With the strong voices of foreign shareholders, the dividend per shareholder is said to be excessive. The point is to reinvest profits, thereby boosting the value of a corporation. Either way, shareholders have nothing to lose. When a national economy records high growth with favorable financial conditions, two opposite opinions take place: “Let’s lessen the burden of the public” versus “Let’s focus more on welfare and social infrastructure.”

The Singaporean government decided to give tax refunds of between 200 to 800 Singaporean dollars (or 118,000 to 475,000 won) to all adults this year according to their income levels. Singaporean Deputy Prime Minister Lee Hsien-Loong explained, “Refunds were made to pay back to the public thanks to larger tax revenues resulting from economic growth.” In a way, it is a divided of economic growth. It was decided that the extra dividends of 1,200 Singaporean dollars would be given to the low income class. In addition, for those aged 50 and older and military veterans, extra assistance is being reviewed. It is not certain if tax reduction will lead to growth, but growth will definitely end up as tax reduction or increased welfare.

Last year, Singapore’s economic growth rate was 6.4 percent. In particular, that of the fourth quarter (from October to December) reached 12.5 percent. Accordingly, such a high growth generated a surplus of 430 million Singaporean dollars (about 255.6 billion won). The opposition party in Singapore is said to have criticized the so-called “growth dividends” as a pork-barrel policy for the general elections next month. However, no one would disapprove. As for Korean taxpayers, amid last year’s low growth of four percent, they paid 600 billion won and are still hassled by the government’s pressure for higher taxes.

The World Economic Forum (WEF) evaluated that in terms of the government’s competitiveness, Korea ranked 42nd, scoring a failing grade last year, while Singapore ranked fourth. There is nothing for the public to lose only if the government could be as efficient as Singapore’s despite higher taxes because the benefits go to everyone and high-quality public services can grow. Taxpayers of a strong nation make happy choices just like shareholders of a strong company. It is unfair for the public to pay taxes to a failing government.

Lim Kyu-jin, Editorial Writer, mhjh22@donga.com