Ruling party, government clash over universal relief fund, taxation on virtual assets

Lee Jae-myung, the presidential candidate of the ruling Democratic Party of Korea, speaks during a meeting of the party's election committee at the National Assembly in Seoul, Wednesday. Yonhap

By Kang Seung-woo

Tension between the ruling party and the government seems to be escalating as its presidential candidate is floating ideas that go against the administration's policies.

Ahead of the presidential election in March, Lee Jae-myung, the candidate of the Democratic Party of Korea (DPK), said he would give a new COVID-19 relief payment to all Koreans, and delay the government's planned taxation of virtual assets ― presumably to appeal to young and centrist voters.

Earlier this week, Lee said the government should provide an additional 300,000 won ($253) to 500,000 won per person in relief funding as the government is expected to log a larger-than-expected surplus in tax revenue this year and many people are still suffering from the economic aftermath of the COVID-19 pandemic.

"We have to take care of small business owners, who have borne the brunt of the coronavirus, and the people who were indirectly yet massively damaged," Lee said during a meeting of the DPK election committee at the National Assembly in Seoul, Wednesday.

"I do not mean we should help them by increasing state debt, but we need to recognize that the debt-to-GDP ratio should not be a stumbling block in providing relief funds."

In response to Lee's push, the ruling party is following his lead.

"We decided to review procedures, the amount and laws regarding additional relief payments," said Rep. Park Wan-joo, who heads the DPK policy planning committee. "But we need to talk with the financial authorities and opposition parties on how it should be done."

However, Prime Minister Kim Boo-kyum made clear the government's opposition to another round of cash handouts, citing financial strain.

"Our financing does not have enough capacity to do this," Kim said in a radio interview Wednesday.

"From the financial authority's perspective, our disposable revenue is limited. We are not in a situation to just get money from here or there."

Prime Minister Kim Boo-kyum speaks during a Cabinet meeting at the Government Complex Seoul, Tuesday. Yonhap

Finance Minister Hong Nam-ki has also maintained that the government should selectively give cash handouts to those who have suffered the most instead of providing money to everybody.

During his visit to Rome with President Moon Jae-in, however, Hong declined to comment on the issue Saturday (local time).

The two sides have also found themselves in conflict over whether to postpone the government's planned virtual asset taxation.

Starting next year, the government plans to impose a 20 percent tax on capital gains from transactions of virtual assets that exceed 2.5 million won.

However, Lee said in May that the taxation should begin in 2023 when the government is poised to levy a 20 percent tax on gains from transactions of listed shares ― the ruling party is now reviewing postponing the taxation plan for one year.

DPK Rep. Kim Byung-wook, who works closely with the candidate, said Tuesday that no related laws regarding virtual assets have been written yet but the government is unilaterally pushing ahead with the taxation plan. "It is reasonable to set up the laws within this year, prepare for one year and start taxation in 2023," he said in a press conference.

With regard to the taxation issue, the prime minister said it was a matter of changing the law.

"They are passing the responsibility to the government. The DPK will have to explain it to the people and change it at the Assembly. If that happens, the government will have to follow it," he said.

Hong also told a National Assembly audit earlier that there would be no problem in following through with the plan next year.

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