Fix the tax fiasco

The government and ruling party held an emergency meeting to come up with measures to ease the higher year-end tax burden on salary workers due to changes in the tax system. People who will have to pay more taxes instead of getting a refund from their year-end settlements are allowed to pay in installments. Deduction rates will be widened for salary workers with a large family or who live alone. Tax benefits will also be increased for pension plans. The government said it will consider retroactively applying the new tax codes on this year’s settlements. The government is even thinking of bending the law in the face of public rage over the year-end settlement bills.

The current fiasco is the work of a careless government and cavalier politicians. The government did not think through the consequences that the tax system revisions would have on taxpayers or bother to explain the changes clearly in advance. In announcing the tax changes, the government gave its assurance that they would only affect the high-income group. The legislature did not look closely into the government’s revisions and carelessly passed the bill. Adding to public anger, the two are now blaming each other.

There are two factors that are aggravating taxpayers as they settle accounts for last year. Because the tax table has been simplified to reduce monthly deductions, people are now entitled to a smaller amount than previous years and some have to pay extra. But before they get angry, taxpayers should calmly compare last year’s tax payment and year-end final figure. The math is the same either way - a small tax refund when less was paid and a larger refund when more tax was paid.

What’s really irritating is the tax burden spike for people who demand care and incentives from the government. Despite its touted campaign to address the low birth rate and aging society, the government reduced its deductions for income earners with many children and scrapped deductions for child care and new births. Refunds on pension schemes were also reduced because deductions were made on taxes rather than income. People are unlikely to let the tax changes go easily.

The government and ruling party acted quickly to fix the problems. But it will have to exercise more discretion in deciding on retroactive application since the move could undermine a law that bans retroactive application of new laws. The government and politicians should be more prudent when fiddling with taxes.

JoongAng Ilbo, Jan. 22, Page 30