[EDITORIAL] Those Who Waste Not, Want Not

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[EDITORIAL] Those Who Waste Not, Want Not

Management of our national finances seems to be slipping into a bog from which it will be difficult to escape. Although the economy is slowing down, the government, like a neglectful homemaker, is increasingly incapable of efficient and stable management of its finances.

It is widely known and expected that tax collections will slow, because the nation's businesses saw sharply slower activity since the beginning of this year. Tax collections this year through September were 68 trillion won ($52 billion), down over 2 trillion won from the same period last year.

As business slows further, it is doubtful that the government can collect the 88.5 trillion won that was its revenue target for the year.

But we are more concerned about next year. To balance the 2002 budget, the government must collect 94 trillion won next year, 6 trillion won more than this year's target. It is clear that the government will find it difficult to increase its tax collections; the income and corporate taxes that form the bulk of the revenue will be assessed on the basis of reduced 2001 individual and corporate income.

Because of the presidential election in December 2002, the government will also find it difficult to force people to pay their taxes.

On the other side of the ledger, the government faces growing pressure to increase its spending. Seoul has also drawn up two supplemental budgets this year, and the United States-led war against terrorism could require a third in the progress of the war.

In addition, demands for more spending in other areas and requests for tax cuts are pouring in from various sectors.

To weather this difficult situation, the government should increase its efficiency in managing its funds. It has no other choice; the economy will not improve suddenly. But financial efficiency has been deteriorating. Some government spending is impractical and there have been unnecessary and wasteful delays in implementing projects it has budgeted for.

A good example of impractical government spending is the six-month classroom expansion project, into which it is pouring more than 500 billion won. The project is currently turning schools all over the nation into construction sites. The government is building 6,000 classrooms under the rubric of this "educational environment improvement project," and plans to finish the construction work by the start of next year, rushing the work as if this were a military operation. The Education Ministry's aim of reducing the number of students per classroom is not a bad one, but the project itself has stirred controversy even within the government about whether it is timely and efficient.

The government earmarked 125 trillion won of this year's budget for public projects, including operations of state-run corporations. But it has allocated only 90 trillion won, or 72 percent of those funds, through last Monday. This shows that the government is inefficient in managing public finances. If the government had implemented the budget as planned, it would have spent 75 percent of this year's budgeted amount by the end of September.

The budget for public projects is a stimulus to the economy, so it is clear that the government did not adjust well to the downturn of the economy.

The government is wasting money in some special projects but failing to spend money where it can be used efficiently. If the government does not change its inefficient habits, it will lose the ability to manage its budget and the economy.
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