Tax cut delay is pure politicsThe governing Grand National Party has begun to discuss delaying a cut in the corporate and income tax rates that is scheduled for next year. It says that, though the government has cut taxes, investment by large conglomerates and consumption by high-income families have not increased visibly. And that’s why GNP members are starting to consider putting off previously planned tax cuts for corporations and the wealthiest taxpayers.
But the real reason seems to be to avoid attacks from the opposition Democratic Party, which says an additional tax cut would be “only for the sake of the rich.” Another reason might be that governing party members hope to expand fiscal spending with the money they save from postponing the plan.
In other words, it seems that the GNP, with a local election scheduled for next year, is going to dodge “tax cuts for the rich” and use the money to buy a bigger pork barrel for voters. The party may say it’s all for the sake of the government’s financial soundness or for the normalization of the tax system - but with an election looming it seems to be pure populism.
It is good that the governing party is seriously reviewing its tax plans with the National Assembly session growing near. But it would not be good if the review was driven by political intentions related to an election.
The JoongAng Ilbo has repeatedly said that the government should keep its rate cut plans in place and reduce government fiscal spending to improve the soundness of government finances.
It is most important to maintain consistency in government policies in order to gain trust from the public and to advance an economic recovery and improve the country’s overall potential for growth.
The government has already announced a tax revision plan that would, in essence, reduce a variety of deductions while keeping the rate cuts. The GNP should not change this existing plan. It would be better for the governing party to consider reducing fiscal spending first.