[Tax Story] Revisiting the Principle of Tax Legality on Gwangbokjeol

Professor Ahn Chang-nam, Department of Economics and Taxation, Kangnam University

If we were to pick the most important keyword related to taxes, it would probably be the principle of taxation law, 'no taxation without representation.' This principle implies not just a passive meaning of paying taxes only as stipulated by tax laws, but also an active and voluntary fulfillment of tax obligations if the tax laws are agreed upon by the representatives of the people. It is a hallmark of a mature democratic nation.

The principle of taxation law was not obtained easily; it was the hard-won result of struggles against royal authority. A few pages into history books reveal that it took hundreds of years to achieve this.

In 1215, England saw the birth of the principle of taxation law with the Magna Carta, which stated that 'taxation requires the consent of the nobles' (before this, the king collected taxes at will). It evolved through parliamentary consent in 1628 (Petition of Right) and parliamentary approval in 1689 (Glorious Revolution and Bill of Rights) to the present day. The authority to impose taxes shifted from the king to the people.

Korea differs from England in that, influenced by Confucianism, the king introduced tax regulations not as exploitation but as a tool for fair distribution of tax burdens. In particular, in 1444, King Sejong established the Gongbeop (貢法, land tax system) by classifying all land nationwide into 54 grades (6 grades by fertility and 9 grades by crop yield). In 1485, King Seongjong completed the Gyeongguk Daejeon, including the Gongbeop, thereby establishing the modern meaning of the principle of taxation law. This was centuries before the birth of the United States.

Japan’s colonial policy over Joseon began with the Hongbeom 14 Articles (洪範十四條) in 1895. Article 6 stated, 'Taxes shall be imposed by law and not arbitrarily collected,' which superficially seemed to protect taxpayers. However, under Japanese influence, the Takjibu (Ministry of Finance) was put in charge of tax imposition, effectively transferring the tax authority from the Joseon king to Japan. Subsequently, with the illegal annexation treaty of 1910, Japanese tax law was oppressively applied to the Korean Peninsula. The issuer of tax notices changed entirely to Japan. Korea lost its tax sovereignty.

Fortunately, in 1919, the Provisional Government was established in Shanghai, outside the Korean Peninsula, and enacted a provisional constitution. Article 48 stated, 'When imposing new taxes or changing tax rates, it shall be determined by law.' This aligns with the current Constitution’s Article 58, which states, 'The items and rates of taxation shall be determined by law.'

The Constitution of the Republic of Korea, enacted after liberation, inherits the legal tradition of the Shanghai Provisional Government and stipulates the principle of taxation law in Article 90. Although King Sejong’s tax spirit was not operational during the Japanese colonial period, it has been reactivated as the foundation of Korea’s tax system through the Shanghai Provisional Government and liberation in 1945.

Even in the harsh circumstances over 100 years ago, when the country was lost and exiled to Shanghai (Chronos), the forefathers reached a conviction (Kairos) that liberation of the homeland would come. They created tax principles to be applied to the liberated homeland, which have continued to the present. We owe infinite gratitude to their efforts and insight.

However, half of the Korean Peninsula is not so fortunate. The North Korean constitution claims to have abolished taxes. Yet, it creates and collects tax-like levies such as transaction profits. Since these are not legally stipulated, the Workers’ Party collects them arbitrarily, causing chaos and high public resentment. In a divided Korean Peninsula where division is prolonged, are we currently planning tax principles for the prosperity of a unified Korea while yearning for unification? Though evil may be strong, truth is a stronger law. We need to strive harder. The future belongs to those who dream.