Lee warns against excessive business regulations

By Park Si-soo

President Lee Myung-bak voiced concerns Tuesday that pressuring conglomerates too hard could dampen their hiring and investment practices as politicians move to support tighter regulations on big companies in order to woo voters ahead of the April general elections.

“If growth slows, we become concerned about employment. If businesses are pressured too much, it could lead them to reduce investment and hiring. This is not helpful to the people at all,” Lee said during a Cabinet meeting, according to his spokesman Park Jeong-ha. “I do not know the political interests involved in this, but I do hope businesses won't shrink.”

The remark came days after the main opposition Democratic United Party (DUP) said it is considering enacting a law to impose a hefty tax on conglomerates and revive a regulation aimed at keeping conglomerates from expanding recklessly amid criticism that they prey on smaller firms and abuse their power.

In recent months, big companies have come under attack alongside widespread public perception that they monopolize the benefits of economic growth while the financial conditions of working-class people continue to deteriorate.

The DUP is aggressively pushing forward an idea to raise the tax burden for the top income bracket and conglomerates. This move is largely seen as an attempt to boost the government’s welfare resources by more than 20 trillion won ($1.8 billion) by 2017.

“It was inevitable to increase taxes for the rich in order not to disadvantage the majority of the population,” Lee Yong-sub, the DUP’s policy committee chairman, said Monday. “The ruling Grand National Party’s past gesture to raise taxes for the rich and conglomerates have had little effect.”

The opposition party is also examining the option of imposing a property tax on large firms which own many subsidiaries.

The ceiling system was scrapped in 2009 to help boost the economy. But it has recently been taken up by political parties as a means to appeal to the public ahead of the elections.

During the Cabinet meeting, President Lee also reiterated his commitment to bringing inflation under control as he pledged in his New Year’s address, saying he would make the issue a top priority even if it leads to less growth, according to the spokesman.

Lee also called for the government to pay greater attention to the well-being of North Korean defectors, saying taking good care of them is part of preparing for unification of the divided Korean Peninsula, Park said.

Nearly 21,000 North Korean defectors have settled in the South, but many of them struggle against discrimination.