Five Trillion Won Budget Plan Put to Assembly Next Month

The Deputy Premier and Minister of Finance and Economy Kim Jin-pyo said on May 2 that “the government will submit additional budgeting plans to the Assembly by June after talking with related ministries in May, as a way to revive the economy.”

“The recent consumption index shows that the Korean economy is on the decline, so we have no time to waste in releasing an economic stimulus package,” he said at a meeting with journalists at Gwacheon Government Office on May 2.

“In addition to the current slump in consumption and investment, SARS is a negative factor that could influence China, our major market, after the second quarter,” he added. “The economy will further decline, but we have to wait and see how far it will slip.”

“We have some 2 trillion and 300 billion won remaining in collected taxes from last year,” Kin said, regarding the additional budget. “The amount of the additional budget would have to be more than that. Due to strong performance among businesses, additional tax revenue could easily be collected.”

The government will decided on the exact amount around May 20. One observation is that it will stand around 5 trillion won.

He also commented on whether to exclude entertainment costs used at golf clubs and restaurants from taxes. “Imposing different tax rules by business for such costs would be against the law,” he said. “I will firm up the system to ensure that these costs are only related to business.”

Meanwhile, the government has decided to hold the “Macro-economy Review Meeting” attended by economic experts from the Bank of Korea, KDI and Samsung Economic Research Institute on May 6 to look into the current real economic situation. The event will be hosted by Assistant Secretary of the Ministry of Finance and Economy Kim Young-joo.

Kwang-Hyun Kim kkh@donga.com