South Korea proposes 'reunification tax'

Aug. 15, 2010 at 8:31 AM

SEOUL, Aug. 15 (UPI) -- South Korean President Lee Myung-bak Sunday proposed a new tax to pay costs expected to reach hundreds of millions of dollars for reunification with the North.

All previous South Korean leaders have supported reunification but only Lee has proposed a "unification tax," The New York Times reported.

The proposal comes at a time of tense relations between the two Koreas and as the health of North Korea leader, Kim Jong-il continues to decline.

"Reunification will definitely come," Lee said in a speech marking the 65th anniversary of the Koreans' liberation from Japanese colonial rule. "I believe that the time has come to start discussing realistic policies to prepare for that day such as a reunification tax."

Lee did not suggest the proposal was linked to uncertainty over North Korean leadership, the Times said.

But officials and analysts in Seoul told the Times they worry about the prospect of Kim Jong-il dying before a successor takes control, as his son, Kim Jong-un, is being groomed to do.

"North Korea will take a unification tax as the expression of a South Korean attempt to prepare for a sudden collapse of the North Korean government," Kim Yong-hyun, an analyst at Dongguk University in Seoul, told the Times.

Yang Moo-jin, a researcher at the University of North Korean Studies in Seoul, said: "President Lee should have first reinstalled South-North exchanges and laid the groundwork for the mood for unification before proposing a unification tax."

Reuniting the economically thriving South with the poor, socialist north could cost from a few hundred billion dollars to $1 trillion, depending how long the process takes, experts have estimated.

Relations between the two Koreas worsened in March when the South accused the North of torpedoing a South Korea warship, killing 46 sailors.

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