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The Tax Network Vulnerable to Corruption

Posted April. 14, 2007 07:56,   


A civil servant of Jongno-gu Office in Seoul, who is in charge of collecting real estate taxes such as acquisition taxes and registration taxes, was caught by the police for reducing taxes worth hundreds of millions of won by manipulating the tax network.

The government employees in charge of managing the comprehensive tax network, which is run by district offices in Seoul, can tamper with the amount of taxes imposed by their colleagues as well as themselves.

However, some point out that this corruption case is only a fraction of widespread corruptions such as the tax embezzlement case that occurred in Incheon in 1994 because no system has been set up to prevent such internal corruption.

Last year, the tax division of Jongno-gu Office was audited, but evidence of corruption was not found.

You can Cancel Taxes, if You Will-

The investigation division of the Seoul Metropolitan Police Agency announced that it arrested Mr. Kim, 48, a civil servant of Tax Division 1 of Jongno-gu Office, on charges of bribery.

Last March, Kim received 1.5 million won in cash from Mr. Ha, 66, who works in the lodging business, in exchange for reducing taxes. Kim accessed the network and deducted 105,540,000 won out of 116,440,000 won worth of real property acquisition and land taxes imposed on the names of Mr. and Mrs. Ha and her brother.

The police investigation found that Kim had received 39 million won from 11 people for canceling and reducing a total of 376 million won in taxes until he moved to Tax Division 2, which is in charge of car and resident taxes, last October.

Mr. Kim manipulated taxes a total of 30 times and among them, 18 cases were levied by his colleagues.

Any government workers who are responsible for levying and collecting taxes can manipulate the data on the comprehensive tax networks operated by all district offices of Seoul City government, even the data typed in by their colleagues. Tax Division 2 of Jongno-gu Office has 19 employees.

The police said Mr. Kim had 140 million won in debt from horse racing gambling and stock investments, and that his salary had been seized since last year.

Vulnerable to Internal Corruption-

Since 1994, when major tax embezzlement cases amounting to 10 billion won both in Incheon and Bucheon broke out, the government has computerized tax administration, but there are still many loopholes.

When employees cancel a collected tax, they are supposed to obtain authorization from their manager (for less than 10 million won) and from their director (for 10 million won or more). But even if they do not obey this rule like Mr. Kim, it is hard to spot such a corruption case, because the Seoul City government changes the amount of taxes as many as 520,000 times due to double taxation or mistakes in the typing process.

The government workers in charge of taxation say that the information on who changed how much and when is documented, but it is not easy to spot an intentional omission because there are too many corrections.

Last summer, Tax Division 1 of Jongno-gu Office was audited, but Kim’s corruption was not detected. Kim was caught when Mr. A called the police. Kim stated to Mr. A, who came to him to ask about three million won in acquisition taxes, that he could cancel A’s taxes in exchange for 1.5 million won.

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