Democratic Party presidential candidate Lee Jae-myung’s proposal for another round of emergency relief funds looks set to ignite another fierce battle between rival parties as lawmakers work to prepare plans for next year’s budget.
The presidential nominee for the ruling Democratic Party has proposed handing out more relief funds to all South Korean citizens, as he believes additional compensation is needed for those who have undergone economic struggles from the COVID-19 pandemic and social distancing rules.
He proposed using the extra tax income expected for next year to pay for the relief funds, saying taxes should be used to alleviate the pain of taxpayers, adding that spending on other government-led projects should be reviewed for possible budget cuts.
“Our country’s proportion of support funds compared to GDP is merely 1.3 percent, reaching only one-tenth of what major countries around the world have provided to their people,” Lee said in a party meeting Monday.
“The debt level inevitably rises as we are forced to spend when economy is bad in this difficult situation.”
He said additional relief payout is critical to support households and small-business owners continuously incurring debts and losses, asking for cooperation from party and government officials.
Lee’s plan is believed to be for payments of between 250,000 won ($210) and 300,000 won for each citizen, as he believes 1 million won in total should be provided to an individual, when combined with how much was paid out in the past during the pandemic.
He proposed distributing the funds in January after specific budgetary plans are finalized and passed late this month. The problem is persuading the government and the opposition bloc to agree with the plan.
Main opposition People Power Party denounced Lee’s plan for being populistic and attempting to buy votes ahead of the presidential election in March. Its lawmakers claim Lee and the ruling party are inconsiderate of the state’s fiscal capacity to afford the additional payout.
“Candidate Lee Jae-myung and the Democratic Party have lauded themselves for gaining additional tax income and promoting economic recovery,” People Power Party spokesperson Rep. Jun Ju-hyae said in a statement Friday.
“But they oppositely ask for support in the relief handout plan, saying taxpayers have incurred huge losses from the disaster, and this does not make any sense.”
Lee proposed having a one-on-one meeting with former Prosecutor General Yoon Seok-youl, the presidential nominee for the People Power Party, in his attempt to push for the relief handout plan.
“(The situation) now is more urgent and important than next year,” Lee said Monday. “If (Yoon is) not trying to fool people to reach his goal by promising to do it when elected, I request to negotiate at this very stage.”
Yoon also has a plan to issue relief funds, but not a universal handout. He has promised to pour in 50 trillion won in the budget next year to make up for small-business losses, but this would be targeted at the owners of those businesses.
The National Assembly is starting a special budgetary committee Tuesday to review the government’s proposal with a goal to finalize the amount by late this month or early next month.
South Korea proposed a record high budget of 604.4 trillion won for 2022, up 8.3 percent from this year’s 558 trillion-won budget. Authorities are hoping it would expedite economic recovery and fill in social gaps within the population that have grown from the pandemic.
It is uncertain whether negotiations for the plan will go as proposed, as multiple government officials expressed concerns and voiced opposition to Lee’s plan, citing growing national debt and the need to prioritize other items in executing the largest-ever budget.
The government has been reluctant to follow Lee’s lead, as some officials believe that providing additional compensation for small-business owners and industries hit by the pandemic is more important than handing out relief funds for everyone.
“To speak for the government, the most imminent task is finding ways to help the travel, tourism and lodging sectors that have been excluded from compensatory measures,” Prime Minister Kim Boo-kyum said in a radio interview early this month, emphasizing that the nationwide payout is not a priority.
“There are so many among small-business owners and proprietors that could not be helped from compensatory measures even though they have incurred losses for more than a year and a half. For the government, helping these people out is the most imminent task.”
The government is at odds with Lee, voicing concerns about his plans, and a poll showed this month that Lee doesn’t have public support.
According to a poll of 1,009 adults by the Korea Society Opinion Institute, 60.1 percent of respondents opposed the relief handout plan. Close to 33 percent of respondents were in favor.
The Korea Development Institute, a state-run research center, has effectively opposed Lee’s relief handout plan as well, proposing that the government responds more selectively in identifying who to support and in what manner.
“Considering that vaccine is swiftly supplied and that virus response measures are lifted, next year’s fiscal policies should be geared toward assisting damaged population and supporting economic transition rather than promoting general economic stimulus,” the KDI said in a report Thursday.
“It is also advised to actively work to regulate the steep growth of national debt.”
South Korea’s national debt could exceed 1,000 trillion won for the first time in 2022 under the incumbent administration’s expansionary fiscal policy that has pushed for a continually growing budget.
Since the Moon Jae-in administration came to power, South Korea’s budget has increased close to 40 percent, growing from 400.5 trillion won in 2017 to over 558 trillion won in 2021.
If next year’s budget is passed, the budget would rise more than 50 percent in five years, a sharp contrast to the 32.5 percent increase during the Lee Myung-bak administration and the 17.1 percent while former President Park Geun-hye was in office.
By Ko Jun-tae (firstname.lastname@example.org