[EDITORIALS]Beware: The Taxman Cometh

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[EDITORIALS]Beware: The Taxman Cometh

The medium to long-term taxation policy announced by the government Monday poses some grave problems, despite the fact that the principles are justified. We do not disagree with the principles, under which the government will expand the tax base and reduce various tax exemptions and deductions, while shifting the tax burden associated with property from the acquisition to the ownership stage. However, the proposed taxation plan is focused so much on buttressing the fiscal base, which has weakened since the 1997-1998 foreign exchange crisis, that it puts too much emphasis on the efficiency of collecting taxes. It also lacks consideration for people in low and middle-income brackets.

The government is right to increase levies on inheritance and transfer taxes. However, the idea of an all-inclusive tax on income is problematic. Article 5 of the Constitution stipulates that the tax law specifies taxable income. Nevertheless, the proposal of levying taxes on "all income" even that not specified in the law is for the convenience of tax collectors, disregarding taxpayers' rights.

The plan to increase taxes on property ownership in return for cutting taxes on capital gains from sales of real estate should also be supplemented because it would likely increase the burden on middle-class and working class people whose house in many cases is all they have. Before levying taxes even on wage-earners' transportation allowances, the government should endeavor to find hidden income earned by the self-employed and professionals.

Political considerations should be excluded in the process of tax reform. Rearranging the object tax, expanding the tax base and cutting the tax rates were the standard fare in tax overhauls in the past. Still, the current taxation system is cluttered with too many tax exemptions and reductions. It remains to be seen how faithfully the government will stick to its principles ahead of next year's elections.

The government should remember that efficient use of taxpayers' money is as important as increasing tax revenues. Should an enormous amount of money be used to clean up ailing financial institutions and corporations, the government will not be able to improve its finances.
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