Is the Finance Ministry a soulless coffer keeper?

A bonus or a gift in cash a worker gets from her or his company for giving birth will be exempted from taxes from now. During a public debate with President Yoon Suk Yeol and senior government officials, Deputy Prime Minister for Economic Affairs Choi Sang-mok, who also serves as finance minister, made the promise to an employee of Booyoung Group, who worried about the tax eating away at the 100 million won ($75,000) gift he received from the company for having a baby recently.

The construction company recently made headlines for pledging a generous offer of rewarding employees 100 million won each for having a baby in a country with the world’s lowest fertility rate among developed economies. But the cash reward, once counted as a bonus, would be subject to income tax. A fight against the worsening birthrate risking the future of the country calls for concerted efforts of the government and our companies.

But tax breaks for individual corporate incentives for births could worsen the divide between large and smaller companies, as the latter cannot afford to keep up with the benefits of the former. Booyoung publicly asked the government to exempt taxes for both the company and its employees, regarding its birth incentive. But a tax benefit should be thoroughly studied instead of being announced in an impromptu manner during a debate.

During the debate, President Yoon chuckled that the finance minister had yielded “good-heartedly.” But given the circumstance, the presidential office must have pressed the finance minister to accept the idea of the president who first proposed tax credits for companies’ birth reward programs. The Ministry of Finance and Economy (MOFE) denied that the presidential office had any influence over its decision and stressed that it was decided purely between the minister and the ministry’s tax division.

But its explanation cannot stand, as the ministry had also given into the presidential office’s pressure to scrap individual tax levy on income from securities holdings and ease the capital gains tax on large shareholders.

The MOFE is the gatekeeper of the government coffers. Under the conservative Lee Myung-bak administration, it estimated and disclosed the fiscal cost for campaign promises political parties made during parliamentary elections in order to check populism.

But we hear no protests or complaints from MOFE these days. It keeps mum even when the opposition Democratic Party (DP), which is responsible for wrecking public finance during the Moon administration, criticizes the current government for “populism.” It is no wonder bureaucrats are vilified as being “soulless.”