By Yoon Ja-young
Staff Reporter
The pro-chaebol and growth-obsessed Lee Myung-bak administration seems to be diverting its policy direction toward the working class and the poor amid plunging popularity.
Days after announcing an unprecedented tax refund of up to $240 to 1.3 million Koreans, it announced Wednesday a cell phone call rate cut for low-income subscribers.
Around 4.2 million people in the low-income bracket will see cell phone call rates cut. They will save a total of approximately 500 billion won at the expense of telecommunication service providers.
The government and the governing Grand National Party announced the measure.
It also unveiled plans to rescue troubled builders struggling with a record number of unsold apartments in provinces outside Seoul.
Those in absolute poverty will be exempt from the basic mobile phone fee, and have call rates cut by 50 percent, probably from October. Currently, they get 35 percent discount in both basic fee and call rates.
It expanded the rates cut to those earning less than 1.4 million won a month. Since they don't fall in the absolute poverty category, they have had no rates cut. They will get 35 percent cut in basic fee and call rates.
According to the National Statistical Office, low-income households tend to be relatively heavily burdened by call rates. The bottom 10 percent of the income bracket spent 9.5 percent of income on telecommunication, and the bottom 20 percent spent 6.6 percent. The spending, however, is equal to only 1.9 percent of total income for the top 10 percent income bracket.
``Telecommunication service is the very basic service that people need, like electricity or medical services. Cell phones, especially, have become more crucial than wire phones for low-income people such as senior citizens without families or daily workers,'' said Rep. Na Kyung-won of the governing party.
The measure is expected to benefit around 4.16 million people. Those in absolute poverty will save an average of 200,000 won annually, while people making less than 1.4 million a month will save 95,000 won each year. The government, however, determined that there would be no spending from the government budget. Instead, telecommunication service providers will shoulder the burden.
The measure will be implemented from July or August after revision of the related law.
It also decided to cut tax on those who buy new apartments in provinces that have been piling up unsold. There are 110,000 such new apartments in provinces as the real estate market bubble went down. They will pay no capital gains tax, and the registration tax rate will be cut to 1 percent from the current 2 percent.