Lawmakers on Thursday grilled Cabinet officials on President Park Geun-hye’s embattled welfare and tax policies in an interpellation session at the National Assembly.

Members of the governing Saenuri Party urged Prime Minister Lee Wan-koo and Finance Minister Choi Kyung-hwan to come up with belt-tightening measures to address rising public debt levels and welfare costs.

But the main opposition New Politics Alliance for Democracy called Park’s “welfare without taxation” policy a failure. Hikes in the tobacco tax and income tax for low and middle-income earners this year went against Park’s pledge to keep taxes steady, they said.

NPAD lawmakers also demanded that the government raise corporate taxes and the minimum wage to close the income gap between the rich and poor. South Korea’s gini coefficient ― statistical measure of income disparity ― is 0.302 as of 2013, according to the Bank of Korea.

“Government reforms seem to have helped only the rich,” said NPAD Rep. Chang Byoung-wan. “President Park’s tax policies are also full of incongruities. Do you still think there were no tax hikes, as President Park has been claiming?”

“The (tax) rises did not come about from any kind of foul play by the government,” Prime Minster Lee said in response. “We are aware there have been some difficulties due to the raised levies on tobacco.”

Finance Minister Choi told lawmakers more taxes would be a “last resort.”

South Korea’s public debt is estimated at around 900 trillion won ($820 billion) according to finance ministry figures announced in December. Lower-than-expected government tax revenues for the third consecutive year also add to debt concerns.

Outstanding household loans of 1,030 trillion won at the end of December 2014, as estimated by BOK, also worries policymakers. They say more debt could spark a stagnation similar to Japan’s in the 1990s and 2000s. Household credit ― loans and credit purchases ― reached 1,090 trillion won, central bank officials said Thursday.

Experts have said South Korea’s deflationary fears could be exaggerated, although others including economists at Goldman Sachs, Societe Generale, and BOK Governor Lee Ju-yeol, have warned private debt levels deserved closer attention.

Politicians are likewise divided.

The governing party is torn between a faction backing decreased welfare payments by the government and another faction backing President Park’s view that the economy cannot afford additional taxes. They say readjusting tax regulations could bring in up to 135 trillion won in untapped money.

The main opposition demands higher corporate taxes and a reversal in Finance Minister Choi’s policies on the real estate market. Choi’s policy of easing lending rules to induce home buying only increases private debt, and is a long-term risk, the NPAD says.

The NPAD supports stimulating growth by raising disposable income levels among middle and low-income earners. The main opposition party has failed to come up with a specific economic agenda of its own, however -- a task newly elected NPAD leader Rep. Moon Jae-in has vowed to tackle.

By Jeong Hunny (hj257@heraldcorp.com)