Civic groups to join crackdown on tax evasion

A slew of South Korean civic groups are set to join a nationwide move to crack down on tax evasion that has been rampant in the country, industry sources said Thursday.

South Korea's new government, which was inaugurated in late February, is stepping up its regulations on the so-called underground economy where many unregulated business activities are taking place. The government has set its sights especially on tax evasion attempts.

According to the sources, about 150 civic groups that represent each profession will set up a unified organization later this month to monitor tax dodge and illegal business activities.

South Korea's shadow economy is mainly attributed to a higher portion of self-employed people, which makes it difficult for the tax agency to detect tax evasion.

South Korea's ratio of self-employed people came in at 28.8 percent last year, compared to the U.S. with 7 percent and Japan with 12.3 percent. Regulating the underground economy has been cited as a main tool to broaden the government's tax revenue base and help finance the additional spending.

The government is known to need 135 trillion won for the next five years to fulfill all of its campaign pledges, including expanded welfare programs.

Separately, religious groups also consider launching a campaign calling for "voluntary" tax payments by religious people, according to the sources.

South Korea has been pushing to impose income taxes on earnings by monks, priests and other religious leaders.

Religious leaders here are customarily exempted from taxes, with some claiming that their work is regarded not as labor but as a spiritual service so they should not be subject to taxation.

Catholic priests have been voluntarily paying income taxes since the mid-1990s and a growing number of religious leaders also seem to be ready to follow suit, expressing their intention to pay taxes on their earnings.

South Korea has about 364,000 priests, monks and other religious people.