[EDITORIALS]Rising debt, tax burdens

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[EDITORIALS]Rising debt, tax burdens

The Korean government has confirmed its budget for next year, which amounts to 238.5 trillion won ($253 million), up 6.4 percent from 2006. The government also said it intends to issue state bonds to fill the 8.7 trillion won budget shortage. The money collected through the bond issuance will be largely spent on welfare and national security. Research and development activities on the economy, science projects or other administrative studies account for 10.5 percent of the total budget, the biggest component of the national budget next year. But the growth of welfare and military spending accounted for more than half of the budget growth for next year, which means the central focus of the 2007 national budget is on welfare and national security. However, the budgeted spending on the economy and other related areas grew meagerly or was reduced.
Next year’s budget offers clear evidence that the time is now for the government to pay the bills for all the projects and plans the administration has been focusing on, most notably expanded social welfare programs and independent national security.
And it also showed that the government is strongly determined to push forward in its plans, even if that requires drastically increasing state debts.
According to the announcement today, the two items ― the welfare program and national security ― are bound to fuel the expansion of government spending for quite a while.
The distribution of national wealth should be based on the consent of the public rather than on the administration’s agenda. We seriously doubt if the public is willing to pay this much money for welfare and the military.
Serious debates are needed before the proposal passes the National Assembly.
What’s worse, the more the government spends the heavier the tax burden is for Koreans.
The tax burden for each taxpayer, which is about 3.63 million won this year, is expected to rise to 3.83 million won. The budget crunch since 1998 is showing growing signs of becoming a chronic problem, and the total state debt amount is expected to exceed 300 trillion won next year.
The government keeps saying the state debt amount in proportion to the nation’s total economy is still far lower than those in advanced countries. But it also needs to study the past experiences of such advanced countries, which greatly suffered from chronic budget shortages and snowballing debts.
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