Cut out the pork barrelPeople are worried about slow business and a possible hike in taxes. Data indicate recovery, but the real economy does not show improvement. Companies and individuals are bombarded with tax audits and scrutiny.
To ease public resentment, the government must prove that tax money is well spent. The public won’t tolerate any tax increases if the government demands more because it is short on public funds without practicing any austerity.
But looking at an analysis of the budget proposal for next year by the National Assembly Budget Office, the government is going in the opposite direction. The office concluded that of the government’s new large-scale projects, 14 are questionable in economic feasibility. Their cost totals 5 trillion won ($4.7 billion).
Thirty-four projects that would require a total of 16 trillion won did not even undergo preliminary feasibility tests. If those works contribute to regional development, they can be approved, even if they are not profitable businesses. But the 14 new infrastructure projects raise questions about what the government is trying to gain politically as well. People are sensitive about government spending because they are paying taxes while the slow economy reduces their income. If projects only serve political purposes, they should be deferred for better economic times. But the government is insisting on pursuing projects where the returns are poor in political and economic aspects. The projects that were exempted from feasibility reviews are also questionable. The government argues that the housing project for low-income people does not need a feasibility study because it is part of a campaign promise by President Park Geun-hye. It plans to draw up a law to mandate the project.
But the government has forgotten the purpose of the preliminary feasibility tests. The tests are enforced in order to prevent waste in budgetary spending. The government cannot carry out pork-barrel projects without business studies just because they were pledged by the president during her campaign.
The coming budgetary review will not likely help. Lawmakers tend to squeeze in unprofitable projects for their constituencies in the review stage, and the government cannot protest in order to win their support for the budget bill. Since the government itself has not practiced prudence, it may not be able to easily convince lawmakers to give up their bad investment plans.
The government should drop its unprofitable business plans before it is too late.