Let’s not gloat
Last year the government managed to exceed its target for tax revenues after grappling with shortfalls for four years. It collected 217.9 trillion won ($182.3 billion) in taxes, 2.2 trillion won more than the government’s original target. A revival in the market for assets - mostly real estate - led to an increase of 3.8 trillion won in real estate-related taxes.
Corporate taxes also increased 2.4 trillion won after the government reduced deductions and exemptions. Income and tobacco tax revenues rose by 1.7 trillion won each after the government tweaked the income tax code that ended up increasing the tax bill for salaried workers and hiked cigarette prices. Finance minister Yoo Il-ho claimed the better-than-expected tax revenue was a feat accomplished in the midst of an outbreak of an infectious disease from abroad and a lengthy drought.
But there is nothing to be proud of in meeting a tax target. The government originally earmarked 221.1 trillion won in tax revenue for 2015. It revised the target down to 215.7 trillion won while seeking a supplementary budget in July following the outbreak of Middle East respiratory syndrome. It would have missed the target if it had not lowered it. It also was the National Assembly, not the government, that brought down the revenue estimate while approving the supplementary budget.
Regardless of better-than-expected tax revenues, the country’s fiscal state is worsening. National debt has exceeded 600 trillion won, surging by 100 trillion won over the last 18 months. By the end of this year, national debt will exceed 40 percent of gross domestic product. Economic prospects are turning glummer. Experts believe the country’s growth potential as well as actual growth has sunk under the 3 percent level.
Household and corporate sectors are struggling. The housing market has also lost vitality. Instead of gloating over one statistic, our leaders must demonstrate a strong will to save the economy.
JoongAng Ilbo, Feb. 6, Page 26