[Editorial] Resignation Lessons

Kwak Tae-won, the chairman of the special committee on tax reform, recently expressed his will to resign, saying, “I can’t have a discussion with the government.” His remark suggests that he cannot be a “supporting committee chairman” when the government sets the direction of tax reform on its own and just asks the committee to develop the logic with which the government can persuade the public. Furthermore, considering that the committee cannot even deal with the tax system related to real estate, which distorts the principle of market economy and even gives rise to controversy over its constitutionality because the government is already fixed it in its comprehensive real estate measures released last August, it is fair to say that the committee is “nominal.”

The committee is responsible for deliberating the tax reform plans of the government, making the plans an issue of public discussion and reporting the result to the government. A mid-and-long-term tax reform must reflect opinions from every sector. But Kwak said, “That was not the case.” This makes one wonder how much the government, which is afraid of discussions with experts, wants to extort the tax system.

Kwak pointed out, “Growth is important now. But the problem is that the government intends to collect more taxes and use the money to resolve bipolarization.” His remark suggests that President Roh Moo-hyun’s idea that he would support those in the lower income brackets by collecting more taxes from those in the top 10 percent income bracket may demoralize economic actors and therefore affect the overall economy. This is the same as opinions from numerous experts.

Although the government argues that Korea’s ratio of taxation against national income is lower than that of advanced countries, Kwak dismissed the argument by saying, “Given the level of welfare service and labor market conditions that vary from country to country, a simple comparison doesn’t work.” He also said that it is obvious that the opposition will be fierce if the government raises the income tax and the corporation tax further. Also, while President Roh says, “Don’t take it lightly” regarding the comprehensive real estate measures released in August, Kwak said that it is an “unsustainable policy.” No wonder those in the administration who pursue “big government” and prefer anti-market real estate measures did not like such criticism.

Kwak’s resignation attempt revealed how much the government is preoccupied with increasing taxes and how lightly it thinks of changing the tax system. As pointed out many times before, the first thing that the government should do to increase welfare benefits for those in extreme poverty is to reduce budget waste and streamline national projects. The government should not develop mid-and-long-term tax reform, which will determine the future of the country’s economy, just based on its tastes. The questions raised by Kwak are persuasive and acceptable enough.