DISPUTES OVER SUPPLEMENTARY BUDGET BILL

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As we reported yesterday, the ruling party and the government decided to dole out at least six million won each to 3.7 million small businesspeople hit hard by anti-COVID-19 rules and business curfews. The rival parties in principle agree on the need to pass a supplementary budget bill quickly. However, they are expected to stage a heated dispute over details like how to raise the needed fund. The government plans to use a surplus of tax revenues to fund the additional budget without issuing more state bonds. The main opposition party is pledging to closely examine the supplementary budget proposal, criticizing the Ministry of Economy and Finance for reversing its previous position.

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As the government officially announced its decision to draw up a supplementary budget bill, the main opposition Democratic Party immediately expressed willingness to cooperate.

[Soundbite] Park Hong-keun(Floor Leader, Democratic Party) : "This is the last chance to compensate the people for pandemic-related losses.We will present more necessary projects and supplement the government proposal."

However, the DP showed a vehement response to the news that no more state bonds will be issued. The decision means tapping a surplus of tax revenues to fund the second extra budget worth over 33 trillion won. The main opposition bloc insisted it is a serious error to miscalculate a tax surplus equivalent to ten percent of an annual budget.

[Soundbite] Park Hong-keun(Floor Leader, Democratic Party) : "The astronomical tax surplus is a very grave issue that threatens to shake up the foundation of state finance. We will formulate a response after closely examining the intentions of budget and tax authorities."

Back in February shortly before the presidential election, the Ministry of Economy and Finance placed brakes on the DP’s move to draw up a supplementary budget, citing lack of fiscal resources. The government and the ruling party decided to scale down the additional budget to 17 trillion won and issue state bonds worth 11 trillion won.

[Soundbite] Maeng Sung-kyu(Special Committee on Budget & Accounts(DP)) : "Rercording a tax surplus of over KRW 50 tn in just three months indicates the Finance Ministry’s incompetence or its hidden political calculations."

Yong Hye-in of the liberal minor opposition Basic Income Party said this is then Finance Minister Hong Nam-ki’s fiscal coup d’etat and that he could have agreed on a 50-trillion-won extra budget bill in February. The lawmaker added it is the people who suffer from a delayed payment of pandemic relief funds. Another contentious issue: how much of the tax surplus can be used for the proposed supplementary budget? Under the national finance act, a certain percentage of a tax surplus must be used to subsidize local governments and repay state debts. Therefore, experts predict the amount of the budget fund available from the tax surplus will likely be far smaller than expected.