South Korea's government and political parties resolved their differences on a controversial free child care program, clearing a key hurdle for the passage of next year's budget plan Friday.

Earlier in the day, the National Assembly delayed the plenary session to deal with the 400 trillion-won ($343 billion) budget bill to 8:00 p.m. from the normal 2:00 p.m. to have more time to finetune details.

Parties and the government had been at loggerheads over the 2 trillion-won child care program for those aged 3 to 5 years old. The ruling and opposition parties earlier agreed to have the central government fund 1 trillion won for the program and raise the remainder from provincial education offices. The government, however, claimed it could only provide up to 700 billion won.

During last-minute talks with the three opposition parties, the government agreed to pay 860 billion won and establish a three-year special account for the purpose.

They also decided to create a new top-tier rate for income taxes to bankroll child care support. Those earning more than 500 million won per year will be subject to a 40-percent income tax rate. The opposition's demand for an increase in corporate tax was turned down.

The agreement paved the way for the National Assembly to meet the deadline for budget approval. The Constitution stipulates that the annual budget bill must be passed 30 days before the start of the new year, The deadline has been met only seven times since 1987.