[EDITORIALS]No need to raise taxesDuring his New Year’s address last week, President Roh Moo-hyun stressed the need for a “fundamental solution” in arranging resources to back the increasing demand for public finances. Although he came short of presenting an actual solution, the government and ruling party have since raised the issue of raising taxes, creating another round of controversy.
But an even more urgent issue that needs to be discussed is whether the government needs to increase national expenditure in the first place.
Mr. Roh emphasized that additional finances are necessary in order to properly proceed with policies to create jobs, establish a social safety net, prepare for an aging society, raise the birthrate and other future plans. Despite acknowledging the need for such actions, it is dangerous to come to the conclusion that the government must spearhead all of them. Since jobs are created when companies increase employment and self-employed businesspersons thrive, it is hard to understand how the administration wants to take on the main role. Plans to cope with the country’s low birthrate and aging society are important, but there’s a certain limit if the government wants to find a solution by injecting public finances. In fact, some issues can be solved more easily by revitalizing private businesses, which would allow companies to spend more on their workers’ welfare, increase the number of jobs and provide individuals with more opportunities and income. The government is obligated to establish a social safety net, but its target should only be those in poverty and the socially vulnerable. It is an unlikely and unwelcome idea to think that the government can enhance the income status of the lower-income class by providing money. It must rather focus on aiding those who want to support themselves and become middle-class.
The current administration wants to expand its presence and become a big government in various sectors, such as welfare, housing and business. It seems that it has decided that the struggling economy is a result of the market’s failure and wants to improve it by intervening. But the current social polarization is due to the government’s mistrust of the market.
It is hard to understand the administration’s conception that increasing its influence will improve the situation, when it should be reconsidering its past decisions. The government must also improve its fact-finding, having suggested that taxes could rise because Korea’s public finance and tax burden is less than that of other leading countries.