ED Largest-ever extra budget

Stop mobilizing taxpayer money ahead of elections

The National Assembly approved a 62-trillion-won ($49.3 billion) supplementary budget Sunday as the ruling and opposition parties agreed on the size of the extra budget after tough negotiations. The largest-ever extra budget ― the first under the Yoon Suk-yeol administration and the eighth during the COVID-19 pandemic ― is mainly aimed at supporting small businesses and others hit by pandemic restrictions.

The rival parties had been at loggerheads over the details of the government's proposed extra budget of 59.4 trillion won. The amount of the proposed budget was raised as the ruling People Power Party (PPP) and the main opposition Democratic Party of Korea (DPK) agreed to increase financial support for pandemic-hit merchants. Under the agreement, 3.71 million small business owners will receive cash handouts of between 6 million won and 10 million won each.

It is fortunate for the two parties to agree, albeit belatedly, and right before the June 1 local elections. Thus, they cannot avoid criticism for exploiting the relief money the small businesses deserve for their losses during the pandemic. The latest supplementary budget has been drafted unprecedentedly without issuing treasury bonds on the assumption that the nation will collect an estimated 53 trillion won in excess tax revenue by the end of the year. This premise appears to have much to do with President Yoon Suk-yeol's campaign pledge to offer 50 trillion won in relief money to small merchants while minimizing the size of the national deficit.

Given the possible shock to the bond market, the move is certainly a step in the right direction. The problem is the potential tax revenue shortfall arising from the shaky economic conditions at home and abroad forecast for the rest of the year. This shortfall is the reason why the new administration should hurry to draw up a contingency plan, assuming that the economy might go into a tailspin amid the prolonged Russian war in Ukraine. Ideally, this budget will be the last pandemic-related supplementary budget, unless COVID-19 resurges. But in the event that it does, budget planners should no longer succumb easily to political pressure to draw up extra budgets ahead of elections.