Parties butt heads at special sessionThe National Assembly has opened an extraordinary legislative session to deliver the government’s plans to revive the economy, but the ruling and opposition parties already began squaring off over the details of the measures.
The 23-day legislative session started Monday to focus on bills intended to boost the economy. The Park Geun-hye administration announced a package of measures on April 1 to revitalize the moribund property market.
The government also decided to draw up at least 12 trillion won ($10.53 billion) in supplementary funding.
While the ruling Saenuri Party and the main opposition Democratic United Party agreed to the needs for those measures, they still differ on the specifics of the plan.
Hwang Woo-yea, Saenuri chairman, proposed Monday to his DUP counterpart to sit down for talks to coordinate their positions in advance. The DUP, however, rejected it.
As concerns grew about the speedy implementations of the plans, President Park yesterday told her ministers to cooperate with the lawmakers to promote her government’s main policies and bills.
“The plans that are directly related to people’s lives will lose their impact if they are delayed,” Park said, during the cabinet meeting. “Timing is particularly important for the property market measures, so you should consult with the legislature closely to pass the bills.”
She also asked the cabinet to pay special attention so that bills regarding the supplementary budget and other national agendas can be approved quickly.
Park also told her ministers to explain the government’s position to the ruling party in advance to win their support before drawing up major policies.
According to the government’s plan to stimulate the real estate market, for the next five years, buyers of homes that are smaller than 85 square meters (915 square feet) and valued at less than 900 million won will be exempted from capital gains tax.
For first-time home buyers, households that earn 60 million won or less per year will be exempted from paying acquisition tax when they buy residences smaller than 85 square meters and are valued at less than 600 million won.
The DUP said the plan must be revised.
“The threshold for capital gains tax exemption should be lowered from 900 million won to 600 million won,” said Representative Joo Seung-yong, chairman of the National Assembly’s Land, Infrastructure and Transport Committee and head of the DUP’s taskforce for property market measures.
“And the upper limit for the acquisition tax exemption should be lowered from 600 million won to 300 million won.”
He said the 85-square-meter restriction for the tax exemption must be scrapped so that home buyers in small cities, where the price per square foot is relatively lower than the capital region and other metropolitan areas, can also benefit from the measure.
He added the tax exemptions should be offered permanently.
“Our positions will be endorsed officially as a party platform through the DUP lawmakers’ meeting,” he said.
The Saenuri Party, however, showed difficulty in accepting the DUP’s stance.
“If the thresholds are lowered, only a few will benefit from the measures,” said Representative Na Seong-lin, acting chief policy maker of the Saenuri Party. “The market will see very little impact.”
Na, however, agreed to the DUP’s position that the capital gains tax exemption should be given to more people by allowing it to a home buyer who satisfies either one of the home requirements, not both of them.
The ruling and opposition parties also have different positions on the supplementary budget.
The government is thinking about drawing up as large as 19 trillion won of supplementary budget, including the expected 12 trillion won shortfalls in tax revenue. Some 5 to 7 trillion won is being reviewed for stimulus measures.
Representative Woo Won-shik, deputy floor leader of the DUP, said drawing up a massive supplementary budget is undesirable. “The government just needs to secure enough money to revitalize the working class economy,” he said.
Woo also said he disagrees with how the government will raise the money.
“It should be raised through tax hikes, not by issuing treasury bonds,” Woo said. “By withdrawing the pledges of tax cuts for the rich, such as corporate tax reduction, and increasing the tax burdens for the conglomerates and high-income earners, we can increase the tax revenues.”
The ruling party disagreed.
“Issuing treasury bonds should be avoided as much as possible,” said Representative Kim Gi-hyeon, deputy floor leader of the Saenuri Party.
“But to stop the economic slowdown and maintain the working-class economy under this circumstance, we have no choice but to issue treasury bonds.”
Kim also opposed the DUP’s argument for the tax hikes.
“When we raise taxes, it discourages job creation and investment,” Kim said. “We want to use the supplementary budget as a temporary measure to stimulate the economy, and tax hikes are a permanent resolution, so that won’t serve our purpose.”
The Saenuri Party, however, is not entirely supporting the Park administration’s plan for the supplementary budget.
While the government wants to use the money mainly to make up for the expected shortfall in tax revenues, the ruling party wants the government to spend more money on massive projects to stimulate the economy.
By Ser Myo-ja, Kim Kyung-jin [firstname.lastname@example.org]