What excuse does this government have?

Tax income rose 3 trillion won ($2.2 billion) in January. The year-on-year rise for the first time in three months is a relief, even it owes largely to the base effect of deficit-ridden 2023. The sustainability of the increase, however, is...

Tax income rose 3 trillion won ($2.2 billion) in January. The year-on-year rise for the first time in three months is a relief, even though it owes largely to the base effect of deficit-ridden 2023. The sustainability of the increase, however, is uncertain as corporate tax income decreased by 200 billion won.

The government maintains it won’t see as big a shortfall as last year’s this year. But the government missed its tax revenue target by record 56.4 trillion won last year, the second straight shortfall under the Yoon Suk Yeol government. The disappointment owed largely (44 percent) to reduced corporate tax from deterioration in earnings.

The government meanwhile rolled out various tax cuts on financial assets at the year’s end, scrapping the plan of introducing comprehensive income tax on securities investment, easing the tax threshold for large shareholders subject to capital gains tax, and expanding tax exemptions on individual savings accounts. The government should do more to lessen the burden on caregiver costs and fight the ultralow birthrate.

The Yoon government has been maintaining tightening policy under its slogan on fiscal sustainability, but that does not mean it stands far better than former Moon Jae-in government for its spending spree. The government instead has been resorting to tax breaks for stimuli alternative.

According to the government tax account estimate for this year, tax deduction and exemptions would amount to a historic high of 77 trillion won this year, rising steeply from 51 trillion won in 2020. According to non-profit Fiscal Reform Institute, the rate of tax redits and deductions this year would reach 16.3 percent, above the 14 percent recommended in the National Finance Act and sharply higher than 14.7 percent in 2008 and 15.8 percent in 2009 under the government of conservative President Lee Myungbak who had been aggressive in tax cuts. The Lee government at least had the pretext of fighting the global financial crisis. What excuse does this government have for its tax generosity?

Twelve years ago, the Ministry of Economy and Finance projected 268 trillion won would be needed to across five years to see through all the welfare benefits promised by rivalling parties ahead of the 2012 parliamentary election. The opposition accused the ministry of meddling in the election, but the office in charge of watching public finance was merely doing its job, regardless of getting a warning from the National Election Commission. The kind of bravado could be unthinkable under this government, which is touring the country with various promises to better livelihoods ahead of the April 10 election.