The Chosun Ilbo team for the National Agenda Project has chosen the renovation of financial policies as its first issue as critics often point out that the Kim Dae-jung administration has dodged the issue.

To begin with, the team believes that the next president will have to press ahead with revolutionary measures to cope with snowballing government debt, including the administration's guarantees on loan payments, estimated to have grown by W125 trillion during the tenure of the Kim government.

Following the guidelines defining the government's debts, the debt figures spiraled up to W122 trillion, or 22.4 percent of the nation's GDP, as of the end of last year, from W60 trillion, or 13.3 percent of the GDP, as of the end of 1997. The government's payment guarantee has also snowballed to W106 trillion from W13 trillion in the same period.

The consensus was that the next government would have to slash budgetary expenditures and to hike tax revenues in a sweeping measure to cut back the unprecedented size of government debt. Analysts also claimed that an increase in tax collection must be achieved through broadening the base of taxation, aimed at equity in taxation, and, as such, the rates of various taxes will have to be lowered drastically.

Four analysts in charge of the project for reforming financial policies, including Professor Park Young-chul of Koryo University, came up with an action plan to lower the tax rates: for individual income tax, from the current 36 percent to 30 percent; for corporate income tax, from the current 27 percent to 25 percent; for registration and capital gains tax, from the current five percent to two percent.

To compensate for the smaller tax revenue due to lower tax rates, the analysts proposed that the current 31 tax categories be simplified into 13, so as to cut down the expenses entailing tax imposition and collection; that the current simplified tax report system be scrapped, as self-employed businesspersons have usually underreported their income; that the current capital gains tax be reinforced by levying the tax on real trade value; and that the current 0.3 percent rate for regular income source monitoring for tax-payers be expanded to 1 percent, as in the United States.

Analysts also called for the current tax investigations that have been carried out by the tax office by selecting taxpayers at random to be replaced with the objective selection of taxpayers, so that the government cannot use tax investigations for political reasons.

Analysts also suggested that the government would have ample room to raise its tax revenue by lightening the tax burden and by preventing tax evasion by shedding more light on the nation's underground economy, which is estimated at about 38 to 50 percent of the gross domestic product (GDP).