Fixing the welfare mess

With the election of Yoo Seung-min as new floor leader of the ruling Saenuri Party, demands are growing for a serious review of President Park Geun-hye’s campaign promise of “welfare without tax hikes.” Chairman of the ruling party Kim Moo-sung joined the chorus by stressing, “Welfare without tax increases is impossible. It’s wrong for politicians to cheat the public with such rhetoric.” His remarks are mainly targeted at the president, who has been adhering to her campaign pledge. We must awake from this illusion and start a sincere debate on reasonable tax increases, while also curbing the public’s appetite for indiscriminate welfare expansion.

Growing welfare expenditures and a snowballing budget deficit could lead to national bankruptcy. Diverse welfare pledges made during the campaign cannot be carried out due to a limited budget, as seen in the critical lack of funds for air-conditioning in classrooms across the country. We cannot bear to see the conflict over how to share the increasing costs of welfare simmer between central and local governments. It is time to fundamentally address the dilemma.

But first, the president must apologize for the current crisis and confess to the mirage that was her campaign promise. If the government changes universal welfare - free school lunches, free day care and half-price college tuition - to a selective system for the truly needy, it could save more than 10 trillion won ($9.97 billion) a year. As the new Saenuri leadership has said, President Park must persuade the people that she has come to her senses. The opposition New Politics Alliance for Democracy must avoid the temptation to politicize the issue, as the opposition is equally accountable for the current mess.

At the same time, the government must start a fresh debate on how to raise taxes, even though that could be a tough job in times of economic slowdown. Yet our society’s demand for more welfare is obvious. The government’s original plan to tap the underground, untaxed economy was never realistic. Stealthy ways of funding welfare, such as raising cigarette taxes, only annoy the public.

But the debate must not turn populistic. A blind call for raising taxes on the rich must be averted. Based on three pillars of revamping the tax system - broadening the tax base and lowering tax rates, fair taxation and efficiency - the government must raise taxes incrementally. But first, the president must rationalize welfare spending. That’s a basic courtesy to her exasperated taxpayers.

JoongAng Ilbo, Feb. 4, Page 34