Reworking campaign promisesThe government held a budget strategy meeting chaired by President Park Geun-hye. It discussed ways to raise funds to finance her campaign pledges on social welfare as well as five-year budgetary operation. Without funding, no campaign vows can work - no matter how good they are. It is hard to neglect the campaign platforms that define a ruling government. The government must come up with optimal solutions to accommodate campaign pledges within budgetary means. It must decide where to spend and how to raise the funds. The president was wise to discuss the matter seriously with cabinet members.
But the meeting primarily focused on how to raise the funds instead of where they would be spent. She said the government will fulfill her campaign vows through budgetary adjustments. But the meeting fell short of studying the feasibility and urgency of the campaign programs as it merely reiterated the need to come up with necessary funds to carry out her promises. For instance, it plans to dig up underground and unreported economic activities and increase tax revenue by scaling down tax incentives and exemptions along with a reduction of expenditures through restructuring of government spending.
But we want to point out that the government’s campaign to crack down on unreported economic activities and reduce tax exemptions and benefits could further dampen the slow-moving economy. Even if the goals are pursued, the government cannot expect to raise sufficient revenue. There’s a limit in squeezing out taxes. In the first quarter, tax revenue decreased by about 8 trillion won ($7.17 billion). The supplementary budget won’t be enough to compensate for this year’s revenue shortfall due to the economic slowdown.
Spending plans by individual public offices cannot be easily reversed and scaled down as they have already been approved by the National Assembly. The government would lose credibility if it suddenly cut off spending to use it for another purpose - mainly to finance new welfare programs. When there is no better means to increase tax revenue and reduce expenditures, the reasonable option would be putting off some of the welfare programs included on the president’s list.
The government should face the music and make honest suggestions to the president. President Park also mentioned that some of the campaign promises were made without accurate budgetary estimations. If she agrees to be flexible, the government can rework campaign platform promises based on their feasibility.