[EDITORIALS]Tax reactions are extremeEver since President Roh Moo-hyun mentioned in his New Year’s speech last week that the country needs to adopt an expansionary fiscal policy to resolve social polarization, rumors have been swirling about a tax hike. Amid a sharp rise in oil prices and fluctuating foreign-exchange rates, the rumors are fanning the nation’s sense of insecurity over its economy.
There is not much to be done about government officials who overreact to comments from the Blue House. And it is natural that they should come up with measures to raise taxes, as the President suggested. However, the high-ranking officials’ move to come up with new taxes seems extreme.
Vice Finance Minister withdrew a call for higher taxes on soju, a Korean liquor, just a day after making the suggestion. He seems to have forgotten that such an attempt failed only a month and a half ago after strong opposition from the Opposition Party.
Early this week, rumors that the government would slap a tax on capital gains from stock trading and adopt a comprehensive tax system blasted the stock market.
After stock prices nose-dived, the Finance Ministry made it clear it had no such plans, but the shock lingered. The country’s business sectors and households are still nervous.
Raising taxes on soju, the alcoholic drink loved most by common folks, is an example of a regressive tax policy hurting those with a lower income. And it contradicts the principle the President set up for addressing social polarization.
The Finance Ministry cares only about what the Blue House says, coming up with tax hike plans that do not make sense. Such actions only add to the distrust of the government and intensify opacity in the nation’s economy.
Tax imposition is a vital policy measure in controlling the nation’s economy. While economic recovery is a critical issue, coming up with the unrealistic measures of a tax hike ― just because the President mentioned it ― is not inappropriate.
And they did not even have conviction for the plan. The government, which should be showing its steadfast will to create more jobs and boost the economy, has turned into a major factor in economic confusion.
The financial bureaucrats should reflect on whether they have thrown away their responsibilities and whether they are caught up in an unnecessary political logic.
And the government should not forget about keeping its balance.