Overhauling the tax service

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Overhauling the tax service

Former National Tax Service Commissioner Jun Gun-pyo has been arrested on charges of taking $300,000 in cash and a luxury Swiss designer watch from the CJ Group in return for overlooking the conglomerate’s multimillion-dollar tax evasions. Jun insisted in the prosecution’s probe that the gift for being promoted to NTS chief and had no strings attached. If so, is he actually saying it is a tradition for conglomerates and large companies to provide large gifts to new tax chiefs? Some say he made up the claim to avoid a heavier penalty, but regardless, the public is enraged and dumbfounded.

We have to ask if Jun is alone in thinking that there’s nothing wrong with tax administrators pocketing huge bribes from large companies. Three senior officials of the NTS, including Jun, were accused of taking money from the group and the chairman, Lee Jay-hyun, who is under investigation for building slush funds abroad and evading taxes through offshore companies.

More people could be indicted as the prosecution’s investigation progresses. In March, nine members of the Seoul district investigation team of the tax agency received a total of 300 million won ($267,141) from seven companies, handing some of that money over to their bosses. The NTS was breeding organized corruption, fattening itself by abusing its authority. Eight out of 19 NTS heads have been investigated by the prosecution. Such a poor tradition may stem from the office’s customs of taking and sharing bribes from corporate executives.

The tax office promises reform every time it is associated with corruption scandals in the early stage of a new government. But there has been little change. It may be because corruption is structural and deeply seated. The government would have to be willing to put its name on the line if it really wants to overhaul the tax agency. The current government created a task force to investigate any corruption by tax officials and, if officials are caught even once, they would be permanently removed from the auditing jobs. The legislature is also discussing a bill to revise the NTS law to change the NTS chief’s term to two years and establish a committee to nominate candidates for the head of the tax agency.

But these actions may not be enough. It should consider strengthening internal reporting by offering huge rewards. The campaign to uncover the shadow economy and unreported tax activities cannot succeed if the NTS is ridden with bribery and corruption. The tax office could go on with shady exchanges with companies attempting to escape tax audits and payments. The reforms must be more radical to clean up the tax office once and for all.
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