Tax Chairman’s Resignation Is Denied

Kwak, the chairman of the special subcommittee on taxes, expressed his intention to leave the post that he has held since March of last year to Yoon Seong-sik, the chairman of the Presidential Committee on Government Innovation and Decentralization, said a source from the presidential committee on April 18.

However, the decentralization committee is refusing to accept Kwak’s resignation, citing a public hearing on mid-to-long term tax reform plans, scheduled for after the May local election.

It is confirmed that Kwak said to the decentralization committee, “I have trouble in carrying out my mission because discussions on tax reforms have not been going well between Cheong Wa Dae and the committee.” This means that the tax committee cannot do the job of figuring out how to persuade the public to accept the tax reform direction set by the government on its own.

He also said, “I have done almost nothing as the chairman of the tax committee. I felt frustrated so many times by ineffective communication (with Cheong Wa Dae and others).” Kwak seems to have been fed up with the fact that the government has reformed real estate related tax policies radically and intends to use taxes for the distribution of wealth.

In particular, Kwak is said to have opposed a government policy of significantly increasing possession taxes imposed upon those subject to comprehensive real estate taxes and imposing capital gain taxes as well on them. He finds this policy included in the August 31 real estate comprehensive measures unsustainable. Kwak also believes that it is wrong for the government to emphasize relatively low taxes in Korea for an OECD member in order to reduce the public resistance to greater tax burden.

He feels that it is unreasonable to compare tax burdens only, without taking into account differences in welfare services, national regulations, and stability in industrial relations among nations. The decentralization committee is worried that if the tax committee chairman, who has led the establishment of tax reform plans, steps down, public confidence in reforms might be undermined.

Chairman Yoon of the decentralization committee, currently on a tour to Southeast Asian countries to provide information on government reforms, said in a telephone interview with this paper, “I am not sure whether Kwak’s intention to resign is related to a personal reason.”

legman@donga.com