Budget plan aims at economic recovery

The approval of the government’s 386.4 trillion won ($331.4 billion) spending bill in the early hours of Thursday allows the government to execute its budget plan, which includes subsidies for fuel costs, a 6 percent increase in child care support and higher wages for nursery teachers.

Expenditures for economy-related programs rose 3.5 trillion won from the government’s earlier proposal, which reflects lawmakers’ strong support for economic revitalization and stabilization of the working class. But lawmakers took 3.8 trillion won off major government projects.

In total, the initial budget plan submitted by the government was shaved by 300 billion won.

“Compared to the government-proposed plan, the final version cut 200 billion won in total revenue and 300 billion won in total expenditures,” the Ministry of Strategy and Finance said in a statement. “The 3.5 trillion won increase in expenditures is focused on helping recover the economy and increase investments in culture and social safety net.”

According to the finalized budget plan, the country’s total debt is expected to reach 644.9 trillion won, accounting for 40.1 percent of its GDP by the end of next year. It is the first time the ratio will exceed 40 percent.

To help improve the quality of life of the working class, the government will supply 23,000 New Stay public apartments, up from its initial goal of providing 15,000 units. To afford the increase, lawmakers agreed to raise the amount required by 149.1 billion won. The government will also spend 31 billion won on repairing and mending old public houses that were built 15 years ago or more, up from 12 billion won.

The subsidy for diapers and powdered milk for low-income households doubled from 10 billion won to 20 billion. The government will dole out 64,000 won for diapers per month and 86,000 won for powdered milk.

The budget for child care climbed 6 percent, or 144.2 billion won. For disabled children, the government will apply an additional 2 percent. The subsidy for nursery teachers will be raised from 170,000 won to 200,000 won per month, according to the plan.

For senior centers, the government will provide an additional 30.1 billion won in fuel and food subsidies. Senior members of low-income households will get an increased subsidy for eye surgeries such as cataracts, as the budget for that rose from 1.3 billion won to 1.7 billion won.

For economic revitalization, lawmakers decided to increase investment in new industries that are expected to drive economic growth. The initial budget for the 3-D printing industry more than doubled from 3.2 billion won to 8.2 billion won.

The budget for the development of unmanned vehicles also jumped from 6 billion won to 15 billion won. The government will also invest 20 billion won in moon exploration projects, up from 10 billion won in the earlier plan.

The budget for the gaming industry has been expanded from 13 billion won to 15 billion won.

Ahead of the Pyeongchang Winter Olympics, 7 billion won will be spent on building art centers under the government’s “Culture Olympics.” And 12.5 billion won, up from 5 billion won, will be used for constructing wharfs for cruise ships.

The tax revision bill also passed the main floor of the National Assembly, enabling introduction of the individual savings account (ISA) that will exempt taxes for interest income up to 2.5 million won. It is mandatory that an individual should hold the ISA for at least three years, according to the passed bill. Initially, it was five years.

Not only income earners and business owners, but also farmers and fishermen will be able to have an ISA that can manage all financial products ranging from savings accounts and funds to equity-linked securities in one platform. The government came up with the system to help consumers manage their assets in a more efficient manner and benefit from bigger tax deductions.

BY SONG SU-HYUN [song.suhyun@joongang.co.kr]