[EDITORIALS]Tax audits should be consistentThe National Tax Service has announced it will launch an extensive investigation of businesses as well as individuals who may have skirted tax payments.
The agency will focus on people who transferred income overseas illegally, underreported income and made large gains through the entertainment business, lending money or real estate speculation.
The agency says it will mobilize all available personnel at six provincial tax service branches nationwide. It is likely that many businesses and individual taxpayers will have a hard time.
The service said that it launched a lightning investigation on Monday evening, focusing on 45 large entertainment organizations suspected of having connections with crime rings or engaging in illegal credit card deals.
It is the tax authority’s duty to investigate individuals as well as businesses that evade taxes and diligently collect back payments.
We think the investigations this time are no exception to this routine. Investigating tax evaders who violate the law or indulge in anti-social activities will bring positive effects to society in the sense that it enhances social justice.
But the purpose of the investigations is to prevent tax evasion. It is possible that the investigations have been launched out of considerations other than tax collection. The fairness of the investigations could be affected.
We think it is not possible to investigate all tax evaders because of the tax service’s limited manpower. And all-out tax investigations are not desirable because the investigations could restrain economic activity.
It is inevitable, therefore, that the tax service must limit the number of subjects who are investigated.
Otherwise, the agency should follow an investigation plan or select those to be investigated on a random basis.
The problem is that the above investigation methods were suspected as aimed at intimidating specific targets in the past. And tax investigations were often used for purposes other than tax collection, such as suppressing real estate speculation, luxury entertainment businesses or controlling rising prices.
To avoid such side effects, it is desirable to investigate tax evaders on a permanent basis, not randomly. We have to reconsider launching extensive seasonal tax investigations.