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Dangerous Election Pledges

Posted March. 10, 2010 04:43,   


With a few months left before the June 2 local elections, empty promises abound. The most representative populist promise in education is the provision of environment-friendly and free meals at public schools and a dramatic reduction of college tuition. Some even pledge child endowment for every household regardless of income and promote temporary workers into regular staff.

Free lunches at public schools will require an estimated three trillion won (2.6 U.S. billion dollars) per year. Even if free lunches are provided to elementary and middle school students only, the government’s bill will be two trillion won (1.7 billion dollars) per year. More taxes must be collected or welfare benefits should be cut in other sectors to allot such a large amount. In other words, the Korean people must shoulder the heavier burden. Yet political parties or politicians who have announced empty and unrealistic promises have said nothing about how they will raise the required money.

If the government decides to raise taxes, the heavier tax burden will affect not just the rich. Last year, 164 trillion won (144 billion dollars) in taxes were collected. The rich accounted for just 20 percent of the amount, including wealth-related taxes (17.2 percent) and general income taxes (3.7 percent). Considering that the general income tax includes that paid by those running small and medium-size enterprises, the tax burden shouldered by high-income earners decreases further. This means around 80 percent of the tax increase will be paid by the middle class and low income earners if corporate tax is excluded. Certain politicians say voters need not to pay more taxes, but they are wrong.

If part of the educational budget is allotted for free lunches, the amount allocated for other must be cut. In the wake of the global economic crisis, the share of the social welfare budget has increased dramatically. As a result, the welfare budget allotted to the low-income bracket is highly likely to be reduced as long as annual allowances for lawmakers or the pay of government officials are not cut. Accordingly, providing scholarships to the children of poor families is a far more efficient measure than offering free lunches to the children of the middle class or rich.

Scandinavian nations consider free lunches as a part of compulsory education. In northern Europe, however, the tax rate reaches 40-50 percent. In other words, free lunch is a policy that cannot be implemented without the Korean people’s agreement to pay more taxes. Politicians should come up with fundraising measures before releasing empty promises.

Along with the free lunch promise, five opposition parties -- Democratic Party, Democratic Labor Party, Creative Korea Party, New Progressive Party and the People’s Participation Party -- even released a joint promise to pay child endowments and expand welfare benefits for the elderly and the physically disabled Monday. Certain members of the ruling Grand National Party even argued for free lunches for more students. Yet Korea has the lowest efficiency in fiscal investment among member nations of the Organization for Economic Cooperation and Development. In the efficiency of fiscal investment, Korea is worse at the risk of fiscal crisis than nations in southern Europe, such as Greece. If both the Korean ruling and opposition parties announce unrealistic pork-barrel promises, they will aggravate the nation’s fiscal conditions and bequeath their descendants more debt.