Disagreement over Additional 4 Trillion Won Budgets

The government decided to add 4 trillion and 200 billion won worth of additional budgeting to survive the current stagnant economy. However, the decision will be likely to go through hardship as the opposition GNP having more members in the Assembly demanded the reduction of the amount of additional budgets and tax exemption for 1 trillion won.

The government, the ruling MDP, the opposition GNP and the United Liberal Democrats held a consultation meeting on June 2nd to discuss over how to process additional budget planning and collective lawsuit system related with securities failing to reach a consensus.

The government explained on this day that it would use some the new budgets for investing in SOC, stabilizing the average income brackets and resolve young unemployment problem.

The opposition GNP that has the most seats in the Assembly argued that the additional budgets should be reduced to 3 trillion won while reducing taxes as much as 1 trillion won. The party numerated earned income tax, special consumption tax and corporate tax for small and medium-sized companies as taxes that should be reduced.

Participating parties temporarily agreed to have further discussion over related issues when deliberating additional budget planning at the Assembly. However, it is expected that there would be a dispute between the government and the GNP.

The Deputy Premier and the Minister of Economy and Finance said at a press conference held after the consultation meeting, “I would oppose the idea of tax reduction under the condition of reducing additional budgets. “

He explained, “Wage negotiations in the private sector have just begun, so it would be proper to discuss reducing earned income tax after October.”

He also added, “Special consumption tax for automobiles are scheduled to be arranged within this year according to the automobile meeting between Korea and the U.S., and it cannot happen with the purpose of stimulating economy. Special consumption tax is very low on high-prices electronic appliances, so real effects would not felt.”

Meanwhile, an official from the GNP implied that the party would go for tax reduction by saying, “Practical effects by reducing addition taxes to 3 trillion won and lowering taxes would reach as much as 4 trillion won”.

For collective lawsuit system related with securities, the GNP argues that its implementation should be delayed until two years later to adjust the current window-dressing practices while the government is determined to carry out the system right away even if that means setting up a counter-measure against inundating lawsuits in the future.

Kwang-Am Cheon Yeon-Wook Jung iam@donga.com jyw11@donga.com