A new step forward has been taken regarding South Korean president Lee Myung-Bak’s proposal for a reunification tax. Lawmakers on the Grand National Party and opposition sides tabled a draft bill to help save money and alleviate future pressure in the event that reunification occurs between the divided Koreas. The purpose of the money would help buffer high expenses attributed to a regime collapse in Pyongyang. The taxes collected would be used to enhance the livelihoods of North Korean citizens, help fortify crumbling infrastructure, and otherwise get North Korea up to speed with its advanced Southern neighbour.
The bill calls for a 2% increase on income tax, a 0.5% increase on corporate taxes, and 5% on inheritance and donation taxes. 1% of the taxes collected would be used to manage the body tasked with collecting and managing the tax. The potential costs for a Korea unification could number in the trillions of US dollars, so in this blogger’s opinion, there is no time like the present to start banking coin to deal with the looming crisis.
Source: Korea JoongAng Daily
1 comment
orbital484
January 8, 2011 at (UTC -4) Link to this comment
Several thoughts to comes to mind is that I’m somewhat skeptical toward South Korean readiness to shoulder the social costs of reunification, and not just the monetary costs.
As you stated, the reunification will require huge sums of currency to build infrastructure, social services, and employment/educational subsidies for the newly absorbed NK populace.
Yet I’m uncertain how tenable such a policy of massive fiscal support will be. I’d imagine that it’s impossible to employ every North Korean of working age, and that a social underclass will inevitably rise, leading to surges in crime and social deviancy. I don’t think I’ve see anything so far coming out of SK policymaking that begins to tackle this eventuality upon reunification.
Whichever SK political party in the Blue House undoubtedly will keep attempting to rely on nationalist sentiment to maintain support for these policies, but I’m sure the opposition will, as usual, be on their back like white on rice (i.e. continuing Leftist opposition against 2MB regarding stronger US-SK stances against the DPRK), and identify the fiscal support with subsidizing consumption by misfits.
Just a few thoughts, and I’d like to discuss this further.