[NOTEBOOK]Give Us Credit, We're Using Our Cards!One metaphor compares the relationship between tax official and taxpayer to the relationship between a suspicious husband and an adulterous wife. It likens the relationship to a game of hide and seek between the tax official, who tries to get his hands on as much tax as he can, and the taxpayer, who tries to relinquish as little tax as possible.
The credit card is a primary weapon for the tax office in the war of wits currently being waged in Korea. If a consumer pays for something by credit credit, the re-tailer's revenue source is revealed and he cannot avoid paying tax on it. Credit cards give the tax office a direct route to revenue. The credit card is like a devoted son to the tax office.
The more times a consumer uses a credit card, the more the flirtatious wife (the taxpayer) must bow to the will of her suspicious husband (the tax office). When the government settled its account balance for the year 2000 on May 29, it found it had collected 13.2 trillion won ($10.3 billion) or 16.6 percent more tax than it had expected. This increase must be at least partially due to increasing use of credit cards.
There are several other factors behind the increase. One is that companies that recorded better profits than expected, such as Samsung Electronics and Hyundai Motors, paid more corporate tax.
But the credit card has played a much greater role in the increase. The soaring popularity of credit card use has meant that retailers' taxable sources have increased by 20 to 30 percent, led by restaurants, whose taxable revenue has swelled by 30-40 percent. Credit cards were used to purchase about 78 trillion won worth of goods last year, more than twice the previous year's 38 trillion won. That sum seems to make nonsense of the much talked-about economic recession. In fact, however, it simply reflects the burgeoning use of cards.
However, some unforeseen problems arise from increasing credit card use and tax revenues. Mrs. Kim owns and runs an eatery in southern Seoul. She now has a problem: she is compelled to increase her prices. Recently, almost all meals she has served － when the bill is over 10,000 won － has been paid for by credit card. These sums would usually have been paid in cash before. These days credit cards are used to settle 70 to 80 percent of her bills, which total about 1 million won a day. Last year that proportion was just under 40 percent.
Mrs. Kim now faces a skyrocketing tax bill. In previous years she had to report only about 45 million won of sales per quarter to the tax office. She then got a tax bill for about 3.6 million won － 10 percent of her sales, minus several tax deductions. But this year she has had to report about 70 million won of sales per quarter. Her tax bill has ballooned to 6 million won, which brings us back to Mrs. Kim's new problem. To make up for the fall in profits, she must raise food prices. The tax office, however, is gleeful, and is concocting ways to further boost credit card use: increasing the number of winners in its "credit card users' lottery" or the size of the jackpot.
The tax office believes that if it promotes card use, tax sources will become transparent and revenue will grow bigger accordingly. However, in the current economic climate, unexpected things can happen. It is common sense that in a depression, tax revenue declines and tax offices even rein in their investigations. But these days, tax revenue has increased despite the drooping economy.
It is not right that the tax office takes pride in exacting more tax from those retailers in the name of "taxation justice." The current tax rate is set on the assumption that taxpayers will still manage to evade taxes. This justifies a higher tax rate, they say, so that some of the losses are recouped.
But as tax revenues have increased, it is high time that the "taxation bubble" is burst and a fair rate is set. A consumer who uses his credit card devotedly should not be betrayed by having to pay more for his lunch.
The writer is the deputy industrial news editor of the JoongAng Ilbo.
by Lee Jong-tae