Government Considers Cutting Taxes

Choi Jung-gyeong, vice minister of the Strategy and Finance Ministry, said yesterday, “From a long-term perspective, the government needs to cut inheritance and income taxes. We’ll cut those taxes while Finance Minister Kang Man-soo holds the post.”

Choi made the remarks after the opening ceremony of The 2008 World Customs Organizations IT Conference & Exhibition held at the Grand Hyatt Seoul, in central Seoul. Choi added, “The government has not pursued tax reform recently. It’s time for it to take a closer look at the nation’s tax system. We’re considering not only cutting inheritance and income taxes but also reforming the overall tax system.”

Recently, banks have argued that the Bank of Korea should inject more dollars into the market. In response, Choi said, “The government can cause moral hazard if it injects dollars into the market to support financial institutions that can secure foreign currency funds. Financial institutions should deal with the recent lack of foreign currencies by themselves.”

He also said, “It is not surprising at all that the nation suffers from a lack of foreign currencies since Korea spends more than it earns in foreign currencies. For example, the current account balance has already turned into a deficit. However, it isn’t impossible to borrow foreign currencies as the recent lack of supply will not get further aggravated.”

In terms of a revised supplementary budget, Choi explained, “The government still believes that it should issue a revised supplementary budget. Some experts argue that the government intends to revive the economy through direct means. Though all kinds of economic stimulus efforts involve direct measures, the government will not make far-fetched efforts to boost the economy.”

tesomiom@donga.com