Gov't churns out populist policies ahead of general elections
President Yoon Suk Yeol touches documents after finishing his opening remarks during a Cabinet meeting at the presidential office in Yongsan District, Seoul, Tuesday. Courtesy of presidential office
The Yoon Suk Yeol administration has come up with a series of policies aimed at revitalizing the economy and lowering the cost of living, as part of the president’s bid to focus the government’s policy efforts toward improving the livelihoods of the people.
However, the policies contradict the government’s direction concerning the management of state expenses within the tax revenue raised, triggering doubts that they are aimed at benefiting the ruling side in the lead-up to the general elections in April.
During a Cabinet meeting, Tuesday, Yoon ordered the government to fully overhaul 91 charges that the government collects as “quasi-taxation.”
“To alleviate the burden on the public and businesses, we need to launch a full-scale review on 91 items of charges and reappraise them from the bottom up,” Yoon said.
“There are charges serving optimistic purposes such as preserving the environment or improving public health, but at the same time there are plenty of charges which are misrepresented as quasi-taxation.”
According to the Framework Act on the Management of Charges, charges refer to financial obligations other than taxes such as share of expenses, dues and contributions the heads of central administrative agencies and local governments impose for public benefit projects.
Vehicles line up at toll gates of Namsan Tunnel No. 1 in Jung District, Seoul, Jan. 4, where drivers have to pay the city's "congestion fee." The Seoul Metropolitan Government and the central government will discuss renaming the congestion fee as a "charge for climate effort." Yonhap
Business lobby groups have been calling for the government to overhaul these charges, saying “the charges, whose purpose is public benefit projects, are becoming excessive burdens for the public and hampers economic activities in the private sectors because they are easier to impose than taxes.”
As of 2022, the government collected 22.4 trillion won ($16.83 billion) of charges from 90 items, up 1 trillion won from a year earlier and 15 trillion won from 2002.
“Charges are imposed for exceptional cases that incurs social costs,” Yoon said. “It should not be overused for the purpose of financing.”
President Yoon Suk Yeol speaks during a town hall meeting on semiconductor and public livelihoods in Suwon, Gyeonggi Province, Monday. Courtesy of presidential office
Tuesday’s remarks are the latest in the Yoon administration’s recent push to roll out policies aimed at improving the livelihoods of the general public.
A day earlier, Yoon promised that the government would extend an act on discounting taxes on semiconductor-related investments, which is scheduled to come into effect at the end of this year, to boost investments.
“There are talks that this will only benefit large conglomerates and shrink welfare costs, making vulnerable people more vulnerable,” Yoon said. “We have to make sure that such talks are nothing more than propaganda.”
Prior to that, Yoon promised on Jan. 10 that the government would scrap extra taxation on multiple homeowners and decided to temporarily increase the tax discount rate on businesses’ general R&D investments by 10 percentage points on Jan. 4. On Jan. 2, Yoon announced a government plan to abolish the financial investment income tax.
Though Yoon said on Monday that “the finance ministry will not sit back and watch the tax revenue decline,” criticisms are growing that the recent tax reduction campaigns are running counter to the government’s own promise of maintaining sound fiscal principles.
In October, Yoon said in his National Assembly speech on proposing the government’s 2024 budget that the government seeks “fiscal soundness,” and it is “not just reducing expenditures but also utilizing the nation's finances efficiently and appropriately without waste.”
However, the government in September forecasted at least a 59 trillion won shortfall from last year’s tax revenue assumption of 400.5 trillion won. The government assumes this year’s tax revenue will stand at 367.4 trillion won, and this may also suffer shortfalls if the government decides to downscale or abolish some of the charges that Yoon mentioned on Tuesday.
The opposition is criticizing Yoon’s recent moves as the administration’s efforts to meddle in the general elections.
“Recently, President Yoon has been touring the weak constituencies of the ruling party in Gyeonggi Province, using town hall meetings to announce vote-catching policies to support the ruling party’s campaigns for the general elections,” main opposition Democratic Party of Korea spokesperson Rep. Park Sung-joon said in a commentary.
“It seems that the president is seeking to turn the public sentiment with irresponsible promises, but the public will not be deceived by this mean trick.”