[Outlook]Little people with a big weapon

“We don’t pay taxes. Only the little people pay taxes.” The American businesswoman Leona Helmsley made this notorious remark in 1983. She was not an economist or a politician. She had accumulated an enormous fortune from her hotel and real estate business. She is infamous for being a ruthless businesswoman and mean to her employees.
She once owned the Empire State Building, the symbol of New York City. Last year, at the age of 80, she ranked among the 400 richest people in America, according to Forbes magazine. Her remark became famous because she ended up being jailed for tax evasion, but there are still few better ways to describe taxation. Whatever taxes are imposed, and whoever pays them, it’s poor and weak people who have to shoulder their burden.
Last week, oil prices caused a heated debate, along with the probe of presidential hopefuls. In the oil prices dispute, Helmsley’s logic is apparent.
In Korea, the gas prices kept setting a new record every day and finally reached 1,800 won ($1.90) per liter. The government then blamed domestic oil companies, saying that the companies take too much for profits for refined oil, citing prices of crude oil as a reason.
The government even issued a press release claiming that this year the oil companies took 59 percent of gas prices as profit. Oil companies reacted strongly. They claimed that with profits for all kinds of oil products combined, the profits they make are only 1.6 percent of prices and that the reason for high oil prices are taxes, which account for 60 percent of factory gate prices.
The dispute between the oil companies and the government is settling down and oil companies are now lowering oil prices. But as this dispute unfolded, consumers discovered that all kinds of taxes for things like transportation, education and driving are imposed on oil purchases. They also learned that last year, oil tax revenues were 25 trillion won, or 18 percent of total tax revenue.
It was also revealed that oil companies set factory gate prices above crude oil prices and made sure gas stations made enough profit as well. All in all, the people figured out that the government tax revenues and oil companies’ profits were made through the sacrifices of consumers.
That is not just about taxes on petroleum. There are numerous cases in which the government increases taxes every year and companies raise prices in order to make consumers bear the burden. This is worse with indirect taxes, like those on oil purchases, which means taxpayers and those making a profit are not the same people.
This happens for direct taxes as well, for instance for property tax or composite real estate tax. Owners of houses want to make tenants or buyers pay the related taxes. As taxes become higher, the socially and economically weak people have a heavier burden.
The Roh Moo-hyun administration has long given up the idea of small government. Government spending and the number of civil workers have increased, so taxes on individual citizens surged as well. According to a report released last week by the Samsung Economic Research Institute, individual taxes increased from 24.9 trillion won in 2002 to 39.5 trillion last year, a increase of nearly 60 percent.
During this period, gross national income increased by 24 percent and the nominal per capita gross national income went up by 22 percent.
The tax increase was more than double the increase in income. Passing down taxes to individuals must be one of the main reasons that social polarization has increased under the Roh Administration.
Will be the government, politicians and companies be able to pass on taxes to individuals forever? Not necessarily. Because taxes are imposed in accordance with the law, people or companies that unfairly pass their taxes to someone else are punished by law. Helmsley, who kept making someone else bear the burdens of her taxes, was finally convicted and imprisoned.
What should we do with the government or politicians who impose excessive taxes or do not use tax revenues effectively?
We have no other way to punish them except with our votes, because we all have one vote whether we are powerful or powerless.
We have the presidential election this year. “Little people” have paid their taxes religiously, even though that means they have to tighten their own belts to survive. We will see what choice these little people make in six months.

*The writer is a senior business editor of the JoongAng Ilbo.

by Sohn Byoung-soo