MDP demands modification of budget bill

The work of compiling next year¡¯s budget bill is hitting snag from the very start of the consultation between the government and the ruling party. The ruling Millennium Democratic Party points out that the people¡¯s tax burdens are too high and the expenditure budget was not compiled efficiently. The government and the MDP held a consultation session on Tuesday to confirm the fiscal 2000 budget bill. But the MDP demanded a drastic modification of the bill drafted by the Ministry of Planning and Budget, pointing out that the bill scaled at 101 trillion won aggravates the people¡¯s burden and has many inefficient aspects in the sector of expenditures.

Rep. Lee Hae-Chan, chief policymaker of the MDP, said, ¡°It is problematic to increase the budget by 6 trillion from this year¡¯s under the difficult situation for people¡¯s living. We will conduct an overall review of the bill and work out plans to disperse the budget technically. ¡±Rep. Chung Sae-Kyun, chairman of the second policy deliberation committee, also said, ¡°The idea of collecting more budget by increasing the energy tax is fundamentally wrong.¡± The government said that the budget size was fixed at the level of 2-3 percent increase, much lower than the estimated growth rate of 8-9 percent.

But experts claim that the expected growth rate of 8-9 percent is too optimistic in light of the latest trend of dull economy. In particular, they noted that excessive collection taxes in the stage of downward economy may seriously hurt business activities. The fact that the budget scale exceeds 100 trillion won gives rise to a psychological inflation that may lead to a moral hazard. In the sector of expenditure, many problems have been raised. First of all, the support for low-income people and the middle class were drastically reduced. Some people also point out that the sharply reduced investment in the social overhead capital that can be dubbed ¡®¡¯engine for growth¡¯¡¯ could cause further frustration in construction business and increase in the number of the unemployed.

Especially, some experts pointed out that reduced investment and budget curtailment in necessary fields could rather aggravate the economy, although budget can be reduced in unnecessary and not urgent fields in order to reduce the national debts, which is the major premise the Ministry of Planning and Budget set for the budget compilation.