&#91EDITORIALS&#93Reforming the tax service

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&#91EDITORIALS&#93Reforming the tax service

The National Tax Service has proposed a reform blueprint consisting mainly of measures to abolish politically motivated tax inspections. The proposal comes shortly after a promise by the new government to stop the use of the agency as a political power tool. Strong public criticism of the empty promises of the past shows the public’s desire for a reformed tax service.
Seen from the perspective of the target, tax inspections often seem arbitrary. “Special tax inspections” are undertaken without legal basis. A requirement for prior notice and written procedures would make tax inspections more transparent and predictable. This could lessen complaints from businesses that they were “unlucky” in inspections.
Obliging businesses to report large cash transactions would be a welcome step toward correcting the tax service’s difficulty in acquiring financial information. This obligation is already in practice in advanced countries and is recommended by the OECD. Most legitimate transactions are already made through transfer accounts and checks, so there should be no major concerns here.
Curbing questionable business expenses, such as by levying consumption fees on “room salons” and golf rounds is desirable, but it also would shrink some business activities. It is difficult to decide case by case which expenses are legitimate and which are not. Below certain limits, the matter should rest with the discretion of businesses themselves. Similarly, allowing collective inspections of bank accounts instead of designating the specific business and bank branch office could be criticized as merely an administrative convenience. Added measures should be taken to prevent abuse of such collective inspections and leaks of personal information.
The National Tax Service should shed its negative image as a tool of arbitrary power and find its proper place as an administrative agency. This of course requires self-restraint from tax officials. An unrealistic reform plan will only bring more public antagonism and mistrust. A steady, gradual solution is needed.
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