An additional supplementary budget (additional budget) will be prepared before the Lunar New Year holiday. This is the 10th supplementary budget under the Moon Jae-in administration. This is equal to the total number of supplementary budgets during the Roh Moo-hyun, Lee Myung-bak, and Park Geun-hye administrations. Even considering the novel coronavirus infection (COVID-19) situation that has continued for two years, it is an overwhelming number.
The supplementary budget was filled with cash support. Regardless of the size of sales, if it is recognized that sales have decreased due to COVID-19, 3 million won will be paid to all small business owners. This is the name of the quarantine subsidy.
This supplementary budget was made official 14 days after the main budget was implemented. The ‘January Supplementary Budget’ is, in fact, a failure in budgeting. Moreover, as it is ahead of the presidential election in March, it is bound to be criticized for ‘relaxing ticket money’.
According to the supplementary budget plan announced by the government on the 14th, an additional 3 million won worth of quarantine support will be provided to small businesses whose sales have decreased due to social distancing measures. This is equivalent to giving back three times the amount after paying 1 million won last month in one month. The amount of money spent on the quarantine subsidy alone reaches 10 trillion won.
As it advocates a ‘one-point supplementary budget’ tailored to small business owners, the financial resources for small business loss compensation for businesses with limited business bans will also be increased. It will be increased to 5.1 trillion won by adding 1.9 trillion won to the previously organized 3.2 trillion won.
The money going into the supplementary budget right now is in a situation where it has to issue deficit government bonds. In order to use last year’s excess tax revenue, the settlement of accounts must be completed in April.
The national debt is inevitably increasing as the supplementary budget is organized through government bonds. Based on this year’s main budget, the national debt was 1064.4 trillion won, and the national debt ratio was 50.0%. For the first time in history, the national debt has exceeded 1,000 trillion won, accounting for half of the country’s GDP. If we add about 10 trillion won to the additional issuance of deficit government bonds following this supplementary budget, the national debt is expected to exceed 1,070 trillion won.
This supplementary budget started from continued pressure from the political circles led by the ruling party. The Democratic Party of Korea has requested the government several times to use the excess tax revenue to create a supplementary budget for measures against small businesses before the Lunar New Year. In addition, on the 13th, President Moon Jae-in directly urged, “Use the excess tax revenue that has increased more than expected to quickly find a way to alleviate the difficulties of small business owners and the self-employed due to the prolonged quarantine.” In fact, it was an order to organize the supplementary budget.
Opposition parties protested. Choo Kyung-ho, senior deputy floor leader for the People’s Power, said, “With the upcoming local elections, general elections and by-elections, the supplementary budget was enforced every time. There has not been a single case since the 1998 IMF crisis. “It can only be seen as an act of being conscious of the presidential vote,” he said.
Rep. Ryu Seong-geol, an opposition member of the National Assembly’s budget committee, also said, “Excess tax revenue is settled in April, and if there is a world surplus as a result, it can be used as a supplementary budget. It is a violation of the National Finance Act.”
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