[EDITORIALS]Soaking the rich and poorThe National Tax Service has launched an all-out effort to increase tax revenue, by strengthening tax investigations on businesses and by other means. In order to make up for the deficiency in revenue, the agency is said to have decided to control more strictly taxpayers who pay corporate and income taxes and press them from all sides. In the case of big businesses, the interval for detailed investigations will be shortened to four years from five, and for medium and small businesses, the number of companies to be investigated will be increased through random selection.
It is said that there is no business here that pays the true amount of taxes it should. Therefore, tax revenue will certainly increase if the agency expands tax investigations like this. But the businesses and individuals that are investigated will naturally think that they are being victimized unfairly.
The fundamental reason why the government is trying to expand the sources of taxation so desperately is that revenue is far below the amount the government has targeted due to slow business conditions. The budget deficit, which was only 282.7 billion won ($268 million) in 2003, increased to 4.3 trillion won last year. It is estimated that this year’s deficit will amount to 4.6 trillion won and next year’s will be 7.8 trillion won. Because the economic stagnation is prolonged, the ability of the people to pay taxes has gone down. But the government has not reduced expenditure. Rather, it has increased spending on income redistribution and welfare. There is no other way but issuing more government bonds or squeezing more taxes from taxpayers to make up for the deficit. After all, expanding tax investigations is nothing but transferring the burden of financial deficit to the taxpayers.
However, the decision to expand the sources of taxation through investigations is a bad policy. It is naive for the government to think it can get the necessary funds through tax investigations without making an effort to reduce budget expenditure. In the early days of the present administration, the agency pledged not to launch tax investigations in order to boost the economy. The economy has not yet recovered, and it is damaging to the recovery and to the credibility of the tax administration if the government increases the scope of tax investigations to secure more cash. Tax investigations should never be used as an expedient means of increasing financial inflow. Before collecting more taxes, the government must first think of ways to reduce expenditure.