Published : 2013-08-19 19:55
Updated : 2013-08-19 19:55
Rival political parties competitively criticized the government for its initial scheme to overhaul the tax code, which drew an angry response from middle-income earners immediately after being unveiled early this month. Instructed by President Park Geun-hye to review the unpopular plan, Finance Ministry officials hurriedly put forward a revised proposal last week. It included a measure to raise the minimum annual salary subject to reduced tax deductions to 55 million won ($49,000) from the 34.5 million won set in the original version.
The ruling Saenuri Party and main opposition Democratic Party have since wrangled over whether the revised scheme would effectively ease the tax burden on middle-income salaried workers. Saenuri officials say the revised tax code for earned income would increase the fairness of the taxation system and expand financial support for broader welfare programs. But the opposition party has rejected the revision, calling on the government to roll back tax cuts for the rich before targeting the working class.
Their arguments, however, are only made to sound hollow and hypocritical by recent data compiled by the National Assembly Secretariat, which shows more than 1 in every 10 lawmakers did not pay a penny in income tax last year. Of the 300 members of parliament, 37 paid no tax on their annual salary of 145 million won. Fourteen others paid less than 100,000 won in income tax, with two of them paying just 4 and 6 won each.
What enabled them to dodge taxes adroitly ― mostly within the legal boundaries ― was the use of various forms of donations to get a refund in the year-end tax adjustment. A high proportion of nontaxable income ― nearly a third of their annual salary ― also helped lessen the tax burden on lawmakers.
According to the data, which did not identify legislators by name, one lawmaker was refunded 7.1 million won, the same amount he paid in yearly income tax.
Parliamentary sources say that it is not unusual for lawmakers to make political donations to one another. Some of them go so far as to spend part of the money contributed by supporters for that purpose and later get the equivalent amount refunded on their own tax payment.
With many of their lawmakers engaged in these tax-dodging practices, the rival parties are hardly in a position to raise their voice about the need to enhance fairness in the taxation system or reduce the burden on middle-income earners, who will eventually pay more to help finance extended welfare programs. Their demands for higher rates of tax on the rich and large companies also carry little weight.
Lawmakers are required to become faithful taxpayers in the first place, not shrewd tax avoiders, if they are to lead the debate over how to overhaul the tax code to ensure that it will be fair and acceptable to all income classes. From a realistic viewpoint, it may be hard to expect legislators ― like other taxpayers ― to voluntarily pay more in tax. In this vein, the election commission and tax authorities need to strengthen cooperation, including sharing information on political donations and tax adjustment, to close the loopholes used by the lawmakers who have no interest in setting an example as taxpayers.