[EDITORIALS]Killing the golden geeseThe National Tax Service will launch tax investigations of 116 large companies soon. Companies that are enjoying brisk sales or those considered likely to evade taxes will be investigated. The National Tax Service said the investigation is an attempt to compile a standard by collecting information on tax payment practices of each industry. While the tax service said this is only for setting a standard, companies are feeling uneasy.
The tax investigation is conspicuously coincidental. President Roh Moo-hyun said the nation needs a measure to come up with more resources to increase spending on welfare, and the tax investigation plan was announced immediately.
Companies are greatly surprised because the tax service ended its investigation of major business groups for the second half of last year only a short while ago. The National Tax Service said the upcoming investigation is separate from the regular tax investigation ― an annual practice with a regular sampling. That means the number of tax investigations for this year will increase.
Last year, the tax service probably collected more than 500 billion won ($507 million) of back-taxes from the special investigations of large companies, and this time, at least 1 trillion won of estimated back taxes are expected to be collected.
This is why concerns are rising that the government is trying to cover the shortage in tax revenue by squeezing money out of companies. The business community complain that the Roh Moo-hyun administration’s economic policy, focused on distribution, has become noticably more focused on collecting more taxes from large companies to reduce the widening wealth gap.
It is undesirable to increase tax revenue by conducting tax investigations with the philosophy that all companies do not hold up to scrutiny. Such tax investigations will increase the uneasiness of companies and are likely to pour cold water on the economy, which is showing some slight signs of recovery.
In addition, by focusing tax investigations on companies with brisk sales, the government is calling them potential tax evaders and damaging their reputations.
Revenue from taxes is insufficient because the economy has been slow. When the economy revives and companies make increased profits, tax revenues will automatically go up.
Squeezing money from booming companies with coercive measures like tax investigations is like killing the geese that lay the golden eggs.