Bipartisan deal over education subsidies in sight

By Korea Herald

Tobacco, corporate taxes still hampering budget approval

  • Published : Nov 25, 2014 - 21:47
  • Updated : Nov 25, 2014 - 21:47

Rival political parties on Tuesday brokered a partial compromise over how to subsidize the nation’s preschools, an issue that has been hampering efforts to finish parliamentary reviews of next year’s proposed government budget by early next month.

The governing Saenuri Party and the main opposition New Politics Alliance for Democracy have been fighting over whether, and how much the central government should fund the 560 billion won ($503 million) child care program known as the Nuri Curriculum. The plan provides free education to toddlers aged three to five.

The dispute overcame a major hurdle earlier Tuesday when officials agreed that the central government would fund local education offices with an indirect subsidy plan.

According to the agreement, Seoul officials will fund parts of the country’s municipal and provincial education office budget, thereby freeing up money in local governments that can be used to finance the Nuri subsidy.

Any insufficient portion will be financed by newly issued local government bonds, with the central government covering subsequent interest payments.

As to exactly how much Seoul officials will provide local governments still remains a sticking point though, and threatens to derail ongoing talks between the parties over the 2015 government budget. Parties however are expected to agree to an amount between 200 billion and 523.3 billion won, officials said.

The row has delayed the entire budget review with all the National Assembly’s permanent 16 committees having finished preliminary examinations except for the education committee which oversees the Nuri funds.

But other outstanding issues that could sabotage the budget review loom large.

Proposals to increase the tobacco and corporate tax rates have been especially contentious. The Saenuri Party supports tobacco tax hikes, while NPAD officials have vowed to relent only if the Saenuri Party agrees to raise corporate taxes.

Governing party officials oppose raising corporate rates citing possible economic downturns.

But with less than a week to go until the Dec. 2 budget deadline, Saenuri lawmakers are eager to finish negotiations. NPAD legislators have been less fixated on the date, saying a budget review must be thorough and less hasty.

The Constitution obligates the lawmakers to finish reviewing next year’s budget by Dec. 2. But they have rarely met the target date, with the last timely review having occurred in 2002.

A 2012 amendment to parliamentary laws created a new clause that would automatically forward the budget bill to a plenary session on Nov. 30, in order to force lawmakers to shake hands over thorny budget issues before early December. This year marks the first time the amendment comes into force.

By Jeong Hunny (