Introduction of the "real-name financial dealing system": its effects and promotion

Abstract

With the aims of normalizing financial transactions, establishing a fair economic system by raising equity of tax burdens as well as contributing to a balanced development of economic community, the government on July 1989, decided to carry out preparations for the implementation of a real-name financial dealing system and a global taxation system for incomes from financial assets, effective 1, 1991. The Ministry of Finance, in a statement setting forth the basic direction of the future tax system management, harshly criticized the growth-oriented economic policy of the past by saying, "economic policy is losing fairness through the proliferation of unearned incomes and special favors, and as a result, public confidence about the legitimacy of wealth is declining." The tax system had been managed heavily in favor of supporting economic growth and development rather than realizing the equity of tax burdens, by increasing the tax reduction and exemption ranges in the strategic growth sector and by imposing preferential levies on income from properties designed to mobilize investment sources.