[EDITORIALS]Half a recovery planThe Grand National Party vowed to make every effort to reduce the tax burden on Koreans. It wants to cut taxes by 8.9 trillion won ($8.5 billion) in the 2006 fiscal year. The party plans to introduce tax reduction bills related to the stabilization of people’s livelihood, including an exemption from a special consumption tax on liquefied natural gas used by taxis, and others aimed at reviving the economy by reducing income and corporate taxes, abolishing the registration tax and lowering the tax rate on fuel oil. If the bills the Grand Nationals are promoting are enacted, they will reduce the average household’s annual tax burden by 620,000 won ($600).
Because the economy is stagnant, the amount of tax people have to pay is decreasing automatically these days. The opposition party’s plan to introduce tax reduction bills is welcome news.
Instead of trying to make up the deficit in revenue by reducing expenditures, the administration is trying hard to collect more taxes, planning an even bigger budget and allowing the number of government employees to grow. During the two and a half years of the “participatory government,” 20,000 civil servants have been added and the number of cabinet- and sub-cabinet-level officials has risen to 148, the highest since the republic was founded in 1948. As a result, the government ran a 439.6 billion-won deficit in 2003 and 466 billion won in 2004. The government is simply spending too much.
The administration is trying to find an excuse for the expansion by saying the welfare budget must increase. But Kim Dae-jung’s administration, inaugurated in the midst of the foreign exchange crisis of 1997, reduced government expenditures by laying off 44,000 civil servants while increasing welfare budgets massively. The Japanese government plans to cut 10 percent of its civil servants in five years in an effort to use tax money more productively and effectively.
The Grand National’s tax reduction plan should include measures to cut spending as it cuts taxes. The party should also lay out the plan’s effect on economic recovery. If it pushes only for lower taxes, it will be criticized for pushing a plan aimed only at the elections this year and next. That would be no different from the attitude of the administration, which is trying to increase welfare benefits by collecting more taxes without regard to the consequences.