By Kim Jae-won
Staff Reporter
Koreans are shouldering the second-lowest tax burden compared to the country's economic output in the OECD, with its ratio of taxes to gross domestic product falling to the second-lowest, just behind the United States, according to the organization, Friday.
Analysts pointed out that the fall in the burden was due to numerous tax cuts under the current government, warning that if the trend continues, the coming generation will shoulder a bigger burden.
According to a report released by the OECD Friday, Korea's national burden ratio, which combines total taxes and social security expenses as a percentage of the GDP, is expected to stand at 25.2 percent this year, the second-lowest among OECD member countries. The United States is expected to record the lowest figure of 24.3 percent.
The ratio has been on a downward spiral since the Lee Myung-bak administration took office. The administration has churned out a number of tax related plans to boost economy recovery.
It peaked at 28.7 percent in 2007, but dropped to 26.6 percent in 2008 when Lee became President in February, and reached 25.4 percent last year.
The expected national burden ratio of Korea in 2010 is about 10 percent less than the OECD average, which is expected to be 35.8 percent. Just six nations ― the U.S., Korea, Australia, Ireland, Japan and Switzerland ― are estimated to report under 30 percent in 2010.
European countries topped the board with more than 40 percent _ Denmark, Austria, Italy, and Finland reported 47.5 percent, 43.4 percent, 42.8 percent and 42.4 percent, respectively.
Analysts predicted that the ratio will grow as the nation is becoming an aging society.
``A low national burden ratio means that the Korean government plays a smaller role in economic policy compared to its counterparts in the OECD,'' said Ahn Jong-seok, a chief economist at the Korea Institute of Public Finance (KIPF).
``The ratio may grow in the future as the nation is becoming an aging society, which lacks labor power and has more seniors to protect.''
In a recent analysis report released by Hyundai Research Institute (HRI), Korea will see the ratio of its working population, aged between 19 and 64, drop drastically in 30 years. The ratio is expected to stand at 72.8 percent this year and go down to 71.2 percent in 2020. The ratio will drop to 64.2 percent in 2030, and will reach 54.4 percent in 2050, the HRI said.
``It is not good that we keep the national burden ration too low. We need to have balance on the issue,'' an official at the Ministry of Strategy and Finance said.
shosta@koreatimes.co.kr
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