From
Send to

[Editorial] Sustainable welfare

Increased welfare without tax hikes out of the question

Feb. 5, 2015 - 19:39 By Korea Herald
President Park Geun-hye’s much-touted, much-ridiculed slogan of “(more) welfare without tax increases” is facing its toughest challenge since she took office about two years ago.

Unfortunately for her, the challenge comes from none other than the ruling Saenuri Party. Kim Moo-sung, the party leader, called promising to finance growing welfare demands without tax hikes a “deception” and newly elected floor leader Yoo Seong-min also publicly demanded a change in the government’s position.

It might be very painful for Park, who has already been struggling with a rapid fall in her support ratings, to face a direct rebellion from the ruling party brass. But the latest development shows that the time has come to start serious discussions to forge a social consensus on an appropriate, sustainable level of welfare and how to finance it.

This task should start with Park’s sincere self-reflection that her campaign promise to expand welfare without tax increases is not tenable.

Setting out numerous new welfare programs ― including those for child care, college tuition support and pension plans for the elderly ― Park insisted that she could finance them by uncovering the underground economy and cutting back on unnecessary spending, instead of raising taxes.

But that was a commitment that could not be met. One need only look at the huge hike in tobacco tax, which was pushed in the name of public health, and the changes to the year-end tax settlement for salaried workers, which resulted in them paying more taxes.

Had Park and her economic ministers come out honestly and said it was inevitable that the government would raise taxes, her approval ratings would not have gone down to such a miserable level as 29 percent.

It is obvious what the Park administration has to do: admit that expanding welfare inevitably needs more taxes and apologize to the public for saying otherwise.

Then comes the real task. First, streamlining welfare programs, for which the prime rule should be reducing universal, indiscriminate ones ― like subsidies for free school meals and free child care. The opposition New Politics Alliance for Democracy, which shares responsibility for the reckless enlargement of such programs in recent years, must join the efforts to turn them into selective, tailored schemes that can benefit those in dire need.

While making strenuous efforts to realign the messy programs, we need to brace for the increasingly greater welfare demand to deal with low fertility rates, child care, rapid aging of the population, medical care, education and poverty. This calls for serious discussions on raising taxes to finance the ever-growing welfare demands.

Yoo, the Saenuri floor leader, said that the nation should seek “mid-level burden and mid-level welfare.” If he meant setting a fair and appropriate level of taxes ― presumably higher than now ― and curbing excessive welfare programs to seek sustainability, we could not agree more.