[Editorial] Discord in Economic Policy Is Ominous Sign

A day after the deputy prime minister for finance and economy, Kim Jin-pyo, announced his plans to lower corporate taxes, President Roh Moo Hyun, surprisingly, voiced his opinion against the plan. It is worrisome that confidence in the new government`s economic policy at home and abroad could fail. It is a serious problem that Mr. Kim, who served as deputy chief of the presidential transition team, and the president are so different in their basic economic policy line.

In effect, the reduction of corporate taxes is supposed to be the first task for the new government`s economic team. The finance minister`s plan seems to have been intended to increase company investment, thereby avoiding an economic downturn. Why is President Roh putting on the brakes? If he is against corporate tax reductions faced by opposition of Cheong Wa Dae`s policy team, it is all the more serious. And it is questionable that other economic policies will be able to be pushed in the future.

Economic policies with conflicting interests among various groups should be decided upon in a careful manner. The controversy over corporate tax reduction appears to be dominated by civic groups, which is not desirable. President Roh blocked the plan saying, "The real intention of the Ministry of Finance and Economy (MOFE) seems to have been conveyed wrongly." His statement, however, gives the impression that the president want to limit the discretion of the MOFE too excessively.

In fact, it is somewhat difficult to reach a quick conclusion on the lowering of corporate taxes considering that much interest is related. In light of corporate competitiveness, corporate taxes should be lower than that for Southeast Asian nations, while in light of the principle of equity for taxation, only corporate taxes cannot be reduced. As a result, policy makers should come up with measures to lower corporate taxes and at the same time not damage the principle of equity.

However, economic policy is a choice. A given policy could benefit certain classes while it could be disadvantageous to another group. There is no policy that can satisfy all. Policy makers and lawmakers should decide on a given policy`s relative importance, putting themselves in the public`s shoes. Now the Korean economy is faced with a crisis in all areas including economic growth, consumer prices and international payments. So, even economic policy makers should not have to operate in such confusing circumstances.