Gov’t has no plan to further increase taxes

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Gov’t has no plan to further increase taxes

President Moon Jae-in said Thursday that he does not plan any further tax hikes, but added that he could reconsider his position if there was public support for an increase.

At a press briefing at the Blue House on Thursday - Moon’s 100th day in office - reporters’ pressed the president on taxation, questioning whether the administration would need to raise additional funds to finance policies such as raising minimum wage, creating more jobs in the public sector and stabilizing the real estate market.

Moon said all of the policies he has promised to implement so far can be achieved within the existing budget since they are all well researched in advance before being announced and added that he is not announcing welfare policies one after the other like “Santa Claus.”

“The government has already announced plans to raise taxes on super large companies and the wealthy and we will continue to review collecting more taxes or expanding welfare programs to redistribute wealth in the country to solve the inequality issue,” the president said. “But the policies announced so far can proceed with the existing government budget and I don’t think it is important to collect more taxes by raising rates at this point.”

Moon added that the government will work on reducing spending through restructuring state-run programs and budgets and that he expects to collect more taxes naturally without raising tax rates. “Many worry that the government is coming up with various policies like Santa Claus without coming up with ways to finance such programs, but I can tell you that all of them were announced after going through a thorough review process,” he explained.

Moon was also questioned on recent government policies to toughen regulations on the mortgage loan application process and real estate speculation, and he said they are the strongest measures announced in Korea’s history.

“I really think it is necessary to stabilize the housing prices issue like the crazy jeonse [lump-sum deposit contract] and monthly rent prices that troubled people during past administrations and to have actual people planning on living there [instead of speculators] purchase homes from now on,” Moon said. “I believe that the latest real estate policies are the strongest in history.”

The president once again emphasized that he will not allow real estate speculation to continue to rise.

“I would like to tell you that the government has tougher measures that are unannounced at this point to be implemented if prices continue to rise,” he added. “The government plans on coming up with policies that will supply residences to actual people planning on living, including newlyweds and young people, to rent at cheaper rates and many of the policies will be implemented as soon as they are finalized.”

On shutting down nuclear plants, Moon said his policy is not to shut those nuclear reactors immediately but wait until the plants have exhausted their lifespan, which would take about 60 years

“My plans to wean the country off nuclear-energy are not rapid,” he said. “The lifespan of the nuclear power plants that are under construction or being operated in the country is 60 years and it will take 60 years for the country to totally become nuclear free. It is not a difficult task to creating alternative energy such as liquefied natural gas and renewable energy, while reducing the number of nuclear power plants one after the other.”

The president said dependency on the nuclear power plants will still remain high at 20 percent of the total energy generated in the country even in 2030. He explained that his policies will proceed gradually and that the public will not have to worry about it.

Even though the Moon administration aims to expand its welfare spending, many experts are concerned about the government’s budget.

The government said it will need about 178 trillion won ($156.5 billion) to carry out its key goals including welfare policies such as raising the minimum social security benefit. The government continues to say that it will not run into financial problems by pushing ahead with its plans but some experts worry that the welfare budget will continue to grow as a result of Korea’s rapidly aging population.

In fact, the Bank of Korea projected that tax revenue will drop by 46 trillion won in 2065, while spending will grow by 160 trillion won compared to last year’s statistics.

The government also said in a 2015 report that its debt-to-GDP ratio, or the ratio between government debt and gross domestic product, will be 62.4 percent in 2060 if current welfare programs continue. The report suggested that the fall in economic growth rate will cause the rate go up to 157.9 percent.

Opposition parties are also criticizing the government’s welfare policies, calling them “YOLO [You Only Live Once] policies” which pass the financial burden on to future generations.


BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]

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