Our social piggy bank

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Our social piggy bank

The government is said to be arm-twisting large enterprises to yield 0.6 percent of their revenue to help out smaller companies. If systematized, it would be more or less a new corporate tax, taking up a sizable 0.6 percent share of the revenue.

For example, Samsung Electronics, whose revenue reached 112.25 trillion won ($102.79 billion) last year, would have to give 673.5 billion won to score high in government-led assessment of corporate contribution to symbiotic growth. LG Electronics, which incurred a net deficit last year, would have to hand over 87.7 billion won. Meddling in corporate affairs and management does not end here.

The National Assembly passed a bill requiring large listed companies to hire lawyers or law professors to supervise their regulatory obligations. Large companies now have to reserve high-paying jobs not only for senior government officials on outside and auditing boards, but also for judiciary officials.

Even President Lee Myung-bak, despite his business background, turned to companies to establish microcredit loan services for self-employed enterprises. Samsung handed over 300 billion won and other conglomerates such as Hyundai, Kia, LG and SK gave 200 billion won each. Various contributions have now amounted to corporate tax levels.

According to the Korea Institute of Public Finance, corporate contributions was 32.26 trillion won, nearly 93 percent of their combined corporate tax payment of 34.85 trillion won last year. Despite the government’s pledge to ease the corporate tax burden, corporate contributions increased by 13 items and nearly doubled from the 2003 level of 17.6 trillion won.

It would be more fair and legitimate to just raise the corporate tax. The government looks cheap by squeezing out various corporate subsidies while on the surface feigning favoritism for companies through small cuts in corporate taxes. Companies cannot progress under such burdens of subsidizing state finances.

Chung Un-chan, chair of the Commission of Shared Growth for Large and Small Companies, says he will push new regulation to force large enterprises to share their profits with smaller contractors.

No companies would be encouraged to do business under such obligations. We must change our mind-set of considering corporate revenue as our social piggy bank. Otherwise, there is no bright future for our companies or our economy.
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