Presidential office displeased with 2023 budget

Lawmakers pass a revised 2023 national budget plan during a plenary session at the National Assembly on Yeouido, Seoul, Saturday. Yonhap

Assembly passes W638.7 tril. budget for next year

By Nam Hyun-woo

The presidential office has expressed displeasure over the National Assembly's approval of a revised 2023 budget plan, with officials there stating it wouldn't be “enough to achieve the government's policy goals.”

The office raised questions about the Assembly's approval of a 1 percentage point reduction in the corporate tax rate, and 50 percent cuts in the budgets for the police bureau in the interior ministry and the human resources management department in the justice ministry. President Yoon Suk-yeol himself reportedly expressed regret over the cuts

Lawmakers held a plenary session Friday night and approved the 2023 budget plan early Saturday, based on an agreement reached by the rival parties Thursday night. Of the 273 in attendance, 251 approved the revised plan, four opposed it and 18 abstained. The Assembly also approved a revision to the Corporate Tax Act to enact a reduction in the current rate.

Following the approval, the government will be able to spend 638.7 trillion won next year, down 300 billion won from its initial budget proposal of 639 trillion won.

National Assembly speaker Kim Jin-pyo bangs the gavel to start a plenary session on approving the government's 2023 budget proposal at the Assembly on Yeouido, Seoul, Friday. Yonhap

In detail, the parties agreed to cut the corporate tax rate by 1 percentage point in each of four tax brackets, which would bring the highest rate down to 24 percent.

This is a compromise for the government and the ruling People Power Party (PPP), which had been calling for a 3 percentage point cut citing the need to spur private investment and resuscitate the economy. However, the main opposition Democratic Party of Korea (DPK), which controls more than half of the 300-seat Assembly, objected, saying the cut would only benefit the superrich.

Also, the budgets for the police bureau in the interior ministry and the human resources management department in the justice ministry were each cut by 50 percent.

At a combined 500 million won, these accounted for only 0.00008 percent of the total budget, but they have been the source of partisan strife, because the two organizations were newly established under the Yoon administration as part of the president's drive to manage the police force and hand over personnel vetting from the presidential office to the justice ministry.

Deputy presidential spokesperson Lee Jae-myoung enters a briefing room at the presidential office in Yongsan District, Seoul, Friday. Yonhap

Regarding the compromise on the two items, the presidential office expressed its displeasure.

“Though we had to make the agreement due to the economic hardship and concerns over creditworthiness of the country, we still have regrets about the budget plan,” presidential deputy spokesperson Lee Jae-myoung said.

“We attempted to expand government spending to create more jobs and reinvigorate the economy, but had to see the budget for cost of living lose its luster due to political power,” Lee said referring to the DPK.

An official at the presidential office said the corporate tax cut was not just for a few large stakeholders; rather, it was aimed at helping employees, partner companies and minor shareholders. He noted that the government still believes a 3 percentage point cut is necessary especially when next year's economic outlook is grim.

“One of the reasons for the protracted budget negotiations was that the office could not accept the 1 percentage point cut, because it contradicts the government's intention to set the corporate tax rate to the OECD average and encourage overseas investments and reshoring,” another presidential aide said on condition of anonymity.

“The budget agreement incorporated the 1 percentage point cut, and though the office respects the National Assembly's decision, it is hard to say we welcome it.”

Reportedly, President Yoon also expressed his displeasure with the budget compromises. Citing unnamed source, news agency Newsis reported that Yoon expressed “strong regret” over the budget cuts for the police bureau and human resources management department.

Regarding the presidential office's thorny response, the DPK stated that it should not be “sulking” over the two parties' agreement.

“Despite the difficult agreement, the presidential office did not release any official comments,” DPK floor spokesperson Rep. Oh Yeong-hwan said. “Is the office remaining sulky because it failed to satisfy the president's stubborn stance on giving a tax discount to the superrich?”

PPP floor leader Rep. Joo Ho-young said Friday that the party had to compromise because “it was impossible to pass a single item of the budget without the 169 seat-holding DPK.”