Gov't hit for 'bungled' disaster income plan

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Discord deepens between municipalities over financing

By Lee Kyung-min

The government has come under heavy criticism for failing to set clear criteria outlining who is eligible to receive “disaster income,” an economic relief package designed to help those hit by the fallout of the COVID-19 pandemic.

Other than the broad mandate to give financial assistance of up to 1 million won ($813) to those in the bottom 70 percent income bracket, top policymakers have yet to reach a consensus over whether income as well as property should be factored in, while members of the public remain frustrated over what they consider an “inconsistent, ill-prepared” measure.

The shared indecisiveness largely stems from fear of a public backlash ahead of the general election as the benefit recipients are voters with differing ideas of what is a “prompt and equitable” re-distribution of taxpayers' money.

No clear-cut method is in store as comprehensive and exhaustive compensation criteria would require considerable time and administrative resources, ending up undermining the policy designed to help those in emergency circumstances in a prompt and efficient manner.

Experts recommend an across-the-board payment to alleviate hardship, and money given to the rich can be balanced out by adjusting any returns they receive in year-end tax settlements.

Second Vice Minister of Economy and Finance Koo Yun-cheol said those in the bottom 70 percent income bracket or earning up to 150 percent of the median income would be eligible, saying the line would be drawn somewhere around the upper limit of the 150 percent level, or around 7.1 million won a month for a four-person household.

“The cut will be made at around 7.1 million won, more or less,” he said in an interview with a local broadcaster, March 30.

According to data from the Ministry of Economy and Finance on 2018 household income, those earning up to 150 percent of the median income for a four-person household was 7.1 million won a month; dropping to 5.81 million won for a three-person household; 4.49 million won for a two-person household; and 2.64 million won for a single-person household.

The criteria would make about 14 million, or 70 percent of Korean households, eligible for the program; but concerns remain that high-income earners with no property are unfairly left out over people who have a lower income but own expensive assets such as apartments and cars.

Such a concern would be dispelled by setting up criteria reflective of people's actual income and property, but the government is reluctant to initiate the process given a previous undertaking for childcare allowances in 2019 cost about 140 billion won and occupied public officials for months.

Yet, the discussion would drag on for months given the public sentiment could swing widely due to the thorny nature of the issue, compounded by the refusal of some municipal governments to pull funds from their own budget.

Of the 9.1 trillion won needed for the program, the central government said it plans to provide 7.1 trillion won, asking the municipalities to shoulder the remaining 2 trillion won.

In a clear act of defiance, however, Gyeonggi Governor Lee Jae-myung said his province would not draft a budget for the necessary amount.

“The central government initially said the amount spent by the municipal government would be compensated for later, encouraging the fiscal stimulus plan. I cannot understand the logic behind asking for 2 trillion won now,” he said on Facebook.

With the interests of different parties clashing, the hardest-hit individuals will suffer most, according to Seoul National University economist Kim So-young.

“Time is of the essence, and the more this drags on, the more strained low-income people will become. It is understandable for the government to make the plan seem equitable to as many people as possible, but priorities should be on how best to help those most in need, not on political calculations to limit blowback on those in power.”