The outline of a way to provide funds for reunification has been revealed one year later after President Lee Myung Bak suggested the idea through his commemorative speech on Korean Independence Day. He indicated that a unification tax should be introduced.
The Ministry of Unification stated, on Monday, that a task force is discussing a way in which to secure finances for reunification. A draft will be announced on or around August 15.
A high official said on the 15th, in a meeting with reporters in the Inter-Korean Immigration Office that, “Two methods are being considered. One is how to better utilize the funds for inter-Korean cooperation”. He continued, “We are thinking about financing this through the tax system but going to try not to put burden on the ordinary person.”
He added that it would likely be revealed three or four weeks after passing through the necessary processes. Therefore, it seems likely that the specific plan may be announced during the President’s commemorative speech on the August 15th.
The inter-Korean cooperation fund is kept at the level of one trillion won (approximately USD942 million) by covering the deficit with basic funds and with a subsidy, then paying the surplus back to the government.
However, according to the government’s plan, from now on the surplus from the fund will not be paid back to but accumulated. In this case, it may be possible to secure around ten trillion won in ten years.
The government predicts that the unification funds may be utilized in around ten or fifteen years and that around 50 trillion won may be necessary at that moment. Therefore, in order to accumulate the necessary 50 trillion won, besides the inter-Korean cooperation funds, the government is going to create an additional reunification tax.
However, before plans can be confirmed, there are several steps such as mediating differences of opinions within the Blue House, the Ministry of Strategy and Finance and other related ministries. Since the issue of the reunification tax is a contentious one, establishing consent between parties may be tough.
Meanwhile the publication of the Chosun Workers’ Party, ‘Rodong Shinmun’, criticized the scheme through its editorial section by stating, “The suggestion of the reunification tax, which is to save reunification costs in advance under prerequisite the of someone’s emergencies, is a confrontational tax and a war tax.”
