[VIEWPOINT]Public watching tax issue closelyFrom now on, the government will hardly dare mention tax reform. The director general for tax and customs at the Ministry of Finance and Economy, who was preparing a mid- to long-term tax reform plan, was disciplined with a warning, and the director in charge was deprived of his position ― a heavy punishment. On the surface, it was said that they were held responsible for leaking information to the press on a tax reform plan that had not yet been confirmed, before it was discussed in a meeting between the party and the government. But it is suspected that innocent working-level officials were made the scapegoats of intensive criticism from the public. If this was not true, could the government have instantly disciplined the director general for tax and customs, who was given a medal a while ago for contributing to drawing up comprehensive real estate measures announced on August 31 last year?
In this situation, there is no knowing what mishap the government might encounter if it again mentions tax changes. Therefore, government officials cannot help but keep their mouths shut as far as taxes are concerned.
The Blue House and the governing Uri Party seem to have decided to disengage themselves from the tax issue. A public hearing on the proposed tax reform that was scheduled to be held on Feb. 20 was delayed until after May. This is to say that they will not even discuss the issue of tax reform until after local elections in May. The reasoning is that they are unlikely to gain anything if they talk further about tax reform and that such talk would put them at a disadvantage in the local elections.
President Roh Moo-hyun provided a cause for the tax-related dispute. By hinting at the need for a tax raise in his New Year address this year, he triggered controversy over taxes. His remarks that he would take fundamental measures to raise financial resources to solve the problems of polarization, an aging society and a low birthrate were directly interpreted as an intention to collect more taxes. When the public strongly opposed his idea of raising taxes, the president retreated, saying he had no intention of going against the will of the people. However, this was just the beginning of the controversy.
Once the controversy over taxes heated up, it did not cool easily. What added fuel to the fire was the finance ministry’s policy of reducing tax deductions for working couples without children. Although the government explained that this policy aimed to correct an unfair tax deduction system, its intention to increase tax revenue was obvious to everyone.
It was natural that people should resist. In addition, as the Uri Party expressed its intention to repeal the tax reform proposal and the government reiterated its policy to push forward with its original plan, contrary to each other, the controversy over taxes led to internal strife between the government and the governing party.
In the midst of this, the government’s mid- to long-term tax reform proposal was leaked to the public, the gist of which was to drastically reduce all kinds of tax breaks and deductions, to which public opinion would never be favorable. As the situation developed further, the tax issue suddenly became a headache for both the government and the governing party. The Blue House and the governing party came to earnestly want to stop the controversy before it became more heated.
Upon closer examination of the mid- to long-term tax reform proposal the government was preparing, most of the contents are matters that have been presented repeatedly to date. It is time the present tax system, which is tattered with various tax breaks and deductions, was improved in some way. However, the tax reform proposal that might have contained some reasonable measures became the target of criticism as it was treated as one with the argument for tax raises, and it is now about to be scrapped in the face of opposition from the general public. That opposition was partly caused by the government’s blindly pursuing a “big government” and thinking lightly of the public’s tax burden. Its rash and reckless plan to collect more tax without sufficiently reviewing the necessity of financial expansion or trying to get public consent succumbed to the harsh reproach of the public.
Now people’s awareness of taxes is unlike before. The public is more sensitive to tax issues and watches financial operations with sharper eyes also. This means that whatever government may be in power, it is bound to meet with failure if it handles the tax issue recklessly. There have been many cases in advanced countries where administrations changed shortly after raising taxes improperly.
* The writer is an editorial writer of the JoongAng Ilbo.
by Kim Jong-soo