The ruling Democratic Party of Korea went too far when it put pressure on the Ministry of Economy and Finance to include presidential nominee Lee Jae-myung’s major election pledges in the government budget.
Referring to this year’s surplus tax revenue, estimated at 50 trillion won ($42.3 billion), Democratic Party Floor Leader Rep. Yun Ho-jung said Tuesday that the financial authorities’ underestimation of the nation’s tax revenue constitutes dereliction of duty and is grounds for a parliamentary audit.
The party is twisting the ministry’s arm to secure funds to carry out Lee’s campaign promises. The National Assembly must not inspect the government in retaliation for putting the brakes on what it wants to do with the government budget.
Surplus tax revenue flows in when the ministry collects more taxes than expected. However, this does not mean the government has money to burn. The government’s fiscal deficit snowballed to 90 trillion won this year. This is a huge debt to repay. Of the estimated surplus tax revenue, 31 trillion won was already allocated in the second supplementary budget.
Probably the party knows these circumstances well, but it speaks as if money were overflowing from the state coffers, and it presses the ministry with the threat of a parliamentary audit.
Deputy Prime Minister and Minister of Finance and Economy Hong Nam-ki has so far withstood the party’s pressure to draw up budgets for Lee’s pledges such as for nationwide COVID-19 relief, local business vouchers and compensation of small businesses for losses from pandemic restrictions.
Of course, it is problematic for the financial authorities to underestimate a year’s tax revenue by as much as 50 trillion won, but more problematic is Lee’s proposal to give money to people before an election. It is effectively an attempt to buy votes.
Lee triggered this conflict by proposing giving every Korean 200,000 to 250,000 won in COVID-19 relief. The party followed up by pushing to pay the money in January, two months before the presidential election. South Korea has become a country where a candidate openly attempts to give money to voters ahead of elections. The relief is said to require 10 trillion to 15 trillion won.
The central government’s total debt reached an all-time high of 936 trillion won. Because of this dire debt situation, both the deputy prime minister and the prime minister, who is a former ruling party lawmaker, remain convinced that it is difficult to draw up budgets for universal relief for the entire nation.
However, the party is so eager to curry favor with voters before the presidential election that it suggested postponing collection of this year’s estimated surplus tax revenue to early next year to expend it as relief shortly before the March 9 presidential election.
If the estimated surplus tax revenue is collected within this fiscal year, it should be used in accordance with the law, which prioritizes giving grants to local governments and redeeming government bonds. Any money left over after that can be tapped only after the fiscal year ends in April next year. In this case, the party cannot use the money before the election. But if tax payment is postponed to early next year, its use will not be restricted by surplus tax revenue regulations.
Finance Minister Hong balked at the tricky idea, citing regulations that restrict postponement of tax payment to unavoidable circumstances such as taxpayers going bankrupt or suffering an injury.
The Korean Constitution clearly separates budget compilation from budget deliberation. The authority to draw up and execute the government budget belongs to the executive branch, while the right to deliberate it is given to the legislative branch. This system aims to preclude politicians from using the budget for political gain. But some pro-Lee lawmakers in the party even argue the Finance Ministry should forfeit the authority to draw up a budget.
The presidential office looks on with folded arms, with a Cheong Wa Dae official saying the ball is in the court of the National Assembly. President Moon Jae-in, as chief of the executive branch, must call on the ruling party to restrain itself.
Surplus tax revenue is not money in the pocket of the ruling party. More than 60 percent of people oppose giving relief money to the entire nation. The Democratic Party must stop acting high-handedly by force of numbers, or at least the Finance Ministry must hold fast to principles for the sake of sound management of the government’s finances.
By Korea Herald (email@example.com