Be smart with tax surplusThe central government is considering using surplus tax in an attempt to boost the nation’s stagnant economy. The decision came after April 13 when President Lee Myung-bak briefly mentioned the possibility of a supplementary budget.
With the Korean economy showing no sign of recovering despite the launch of a new administration, such a decision was announced as a quick fix. It is not right to use surplus tax, however, to stabilize the nation’s economy. President Lee’s pressure to improve the current economic woes is understandable, but using surplus tax to spark the economy goes against the principle of operating with national funds; its effectiveness is also in doubt.
The central government reported a 15.3 trillion won ($15.6 billion) surplus in tax income. Of the tax, 5.5 trillion won will be allocated to local governments and 5 trillion won will fund public causes and used to pay down national debt. After that, about 4.8 trillion is left.
What the Lee Myung-bak administration is saying is that it will use 4.8 trillion to jumpstart the economy.
The central government publicly announced that it would use surplus tax to make up for losses, mainly due to the new administration’s tax cuts.
If surplus tax is used for the national economy, then the government is going to create a lot of debt by failing to fill shortages in tax revenues.
With its ineffectiveness, the central government’s quick fix also goes against Korea’s Finance Act. The Grand National Party, which has turned into the ruling party, in the past rolled up its sleeves to add more restrictions in efforts to prevent surplus tax from being used in the wrong way.
In addition, the new Lee administration often promised that it would not artificially promote the national economy by using surplus tax.
It is true that the economy has worsened, but there have been no large-scale economic disasters in Korea to prompt the Lee administration to break its promise.
The government should not work for tangible achievements to prove that it is doing good for the public.
The public understands that the economy cannot be improved overnight. The government should reconsider using surplus tax money. Instead, the government has to stay focused on reviving the economy with deregulation and tax cuts, so the Korean economy will be improved in a healthy way.