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Bipartisan cooperation is a must for people's livelihoods and economy

Bipartisan cooperation is a must for people's livelihoods and economy

Posted March. 18, 2023 07:51,   

Updated March. 18, 2023 07:51


The National Assembly is expected to pass the "K-Chips Act" this month to ease the burden on Korean companies amidst the global semiconductor competition and promote investment. This was made possible by an agreement between the ruling and opposition parties, with the Democratic Party supporting the government's proposal to reduce taxes by 15% for large companies investing in semiconductor facilities. Following the inauguration of the Yoon Suk Yeol administration, the National Assembly, which had been deadlocked due to severe conflicts between the ruling and opposition parties for approximately 10 months, finally reached a consensus.

The ruling People Power Party and the main opposition Democratic Party successfully passed an amendment to the Restriction of Special Taxation Act in the Taxation Subcommittee of the Strategy and Finance Committee on Thursday. The amendment increases the tax deduction rate for semiconductor facility investment for large companies from 8% to 15% and for small and medium-sized enterprises from 16% to 25%. Furthermore, the ruling and opposition parties agreed to include hydrogen technology, and future transportation means in the national strategic technologies, providing them with similar benefits. As both parties agreed upon the bill, it is expected to pass smoothly at the plenary meeting of the Equipment Committee on Wednesday and the plenary session on March 30. Samsung Electronics' investment plan to build a high-tech semiconductor cluster in Yongin, investing 300 trillion won over the next 20 years, is gaining momentum.

The National Assembly passed the K-Chips Act at the end of last year. The ruling party aimed to increase the tax deduction rate for conglomerate semiconductor facility investment from the original 6% to 20%, while the opposition party insisted on 10%. But in the end, the Ministry of Strategy and Finance's suggestion of 8% was accepted due to concerns about a reduction in tax revenue. There was widespread criticism that the level of support was considerably lower than that provided by the U.S. and Taiwan, which offer tax cuts of up to 25% for facility and R&D investment. Eventually, the president ordered a review. The Democratic Party, which had previously opposed tax cuts for large corporations, changed its stance, resolving the issue by revising the law.

The bipartisan agreement may allow the National Assembly to move in a productive direction. Since the launch of the Yoon administration, the National Assembly has been hindered by sharp confrontations, resulting in delays to people's livelihood and economic bills. Recently, People Power Party Chairman Kim Gi-hyeon and Democratic Party Chairman Lee Jae-myung recognized the need for cooperation in public livelihood. It is important to build on this momentum and address bills to help ordinary people and businesses struggling with high prices, high-interest rates, and prolonged economic recession.

In particular, legislation on the 8-hour overtime work system for small and medium-sized businesses with less than 30 employees expired at the end of last year, and workers are calling for urgent action. Many have seen their incomes decrease because they cannot work overtime. Additionally, small merchants and ordinary citizens are struggling with high electricity and gas rates, and both the ruling and opposition parties should work together to support them. To address concerns about fiscal soundness resulting from tax revenue cuts, it is crucial to expedite the introduction of fiscal rules currently being discussed by both parties.