The government’s drive to raise tax revenue by shining a light on the underground economy is expected to get a boost from a group of citizens committed to bringing tax evaders to justice.
Today people from some 150 civic organizations, including consumer groups and associations of self-employed businesspeople, are to launch a watchdog group to combat the shadow economy.
Promoters of the grassroots movement say tip-offs on tax evasion have been pouring in from whistle-blowers since they announced their plan earlier this month.
A citizen called them to report the tax evasion of a wedding hall operator. He paid 10 million won to the company for his wedding, but he happened to find out during a visit to a tax office that the operator reported only 1 million won of his payment to the tax authorities.
A supplier of goods to a large company that runs a convenience store chain tipped the watchdog group off that the company has made his life difficult by forcing him to pay 5 to 7 percent of his revenue in kickbacks.
The group will verify these tip-offs and provide its findings to the National Tax Service and the Fair Trade Commission for official investigation.
The group’s citizen watchdogs will soon start to collect information on tax evasion on their own. Organizers say they have already trained 1,000 citizens and will train 500 more each month until the total number reaches 20,000.
Citizen watchdogs consist mostly of self-employed shop owners who have a good grasp of the underground economy. They include owners of eating and drinking places, liquor sellers and operators of entertainment businesses.
Potential tax evaders that citizen watchdogs plan to track include distributors of fake whiskeys, manufacturers of bogus petroleum products and sellers of illegal foodstuffs.
The targets will also include institutions offering illegal and expensive private tutoring, usurious private money lenders, operators of illegal gambling places, stock manipulators and bribe-taking public officials.
The emergence of voluntary citizen warriors against tax evasion is encouraging as they will help the government crack down on the shadow economy and increase tax revenue.
Korea cannot become an advanced economy without reducing its abnormally large shadow economy. Underground economic activities should be reined in not just because they reduce tax revenue but also because they weaken the social fabric by providing a fertile ground for corruption.
In this regard, ordinary citizens are encouraged to participate in the campaign against the underground economy. They can reduce the room for tax evasion by never forgetting to collect cash receipts when they pay in cash for the goods and services they purchase.
