[EDITORIAL] Government Spending Questioned

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[EDITORIAL] Government Spending Questioned

The government's financial situation is growing worse and worse because the effectiveness and stability of the nation's finances are faltering as tax revenues decline. Due to this year's plunging economy, tax revenues by the end of September barely reached 67.7 trillion won ($52 billion), 2.2 trillion won lower than that of the same period last year. The government seemed to have difficulty meeting its goal of tax revenue - 88.5 trillion won - by the end of this year.

Seoul will have to collect 95 trillion won in taxes in 2002, 6 trillion won more than this year's tax revenues, but it likely will run into problems to achieve that goal. In particular, the government will find difficulties in securing sources of taxable income because corporate taxes and income taxes, comprising a large portion of the tax revenues, should be levied on incomes lower than last year due to the slow economy this year. Since Seoul cannot collect an unreasonable amount of taxes in an election year, failure to meet the tax collection goal will be unavoidable. In contrast, additional government spending can be demanded at any time during the course of the war against terrorism, casting a dark cloud over managing the government's finances.

If the government is unwilling to take a large loss, the only solution is optimizing the effectiveness of government spending. Seoul should revise its spending plans based on priority, profitability and timing. For example, the government had planned to build 6,000 classrooms in schools nationwide by early next year, in order to improve the education environment. However, pouring 500 billion won into such a project, and making it seem like a military mission, should be reconsidered. Because spending budgets for public projects are the driving force to prime a sagging economy, the government should come up with measures to spend those budgets effectively.
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