Policies push marriage, birthsGood news for fiances who earn less than 70 million won a year. If they get married in 2018, they may be eligible for a tax refund of up to 500,000 won ($414).
If both husband and wife are working, the refund could be as much as 1 million won.
That is one proposal in a revision of the tax laws the government hopes to pass in the National Assembly in February.
The revisions would be affective on the first day of 2018.
The refund for newlyweds was part of a grander economic management plan announced Thursday.
The government is hoping to deal with changes in Korea’s social structure, including demographics and also strengthening the social safety net, particularly for people in the middle and lower income brackets and elderly who live alone.
“[Today] the economic conditions for [middle and lower income households] is difficult,” said Finance Minister Yoo Il-ho on Thursday as he announced next year’s management plan. “Job opportunities have shrunk because of the slowing economy and the restructuring of industries.
“Any improvement in wealth distribution has come to a stop,” he said, “as the income base for the public and people in vulnerable classes has weakened.
“We are also faced with structural changes that are in progress; the productive population has been decreasing, which forces us to review the fundamental framework of our economic management plans including the growth strategy and welfare system that were based on the assumption of growth.”
The idea of giving refunds to newlyweds is meant to encourage young people to get married and ultimately have families as the shrinking of Korea’s productive population is one of the biggest structural challenges the country faces.
“In the past 10 years we have spent 80 trillion won and in the next five years that amount is expected to increase to 100 trillion won, and yet we are on the lowest rung when it comes to birthrates among OECD members,” said Baek Yong-chun, a Finance Ministry director general. “We are currently looking at every angle [including housing problems for young people] to raise the efficiency of our fiscal investments so that with limited financial resources we could maximize results.”
This includes expanding lower interests on loans taken out by newlyweds. Currently newly married couples can apply for loans with interest rates are between 1.8 percent and .2.4 percent. This will be lowered to 1.6 percent to 2.2 percent. The government is also planning to raise the monthly pay for maternity leave from the current 1.35 million won to 1.5 million won.
Also the government is looking into expanding support for families with children. Previously, government support was given to families with more than three children. It may be extended to families with more than two.
The government said it will come up with such measures in the second half.
The government has also decided to raise subsidies for low-income families to help them with basic necessities.
The maximum subsidy will be raised from 1.27 million won a month for a family of four to 1.34 million won, which is a 7.8 percent year-on-year increase.
In addition, a 113,000 won monthly subsidy given to low-income households will be raised 2.6 percent to 116,000 won.
Although there are no specific new plans to help elderly people living alone, the government plans to come up with support measures by July.
“Currently the poverty problem in households with two or fewer members is a major issue,” said Lee Ho-seung, director general of the economic policy bureau at the Finance Ministry. “Many of the people living alone are old people, so we plan to create a standard that could help provide additional subsidies for their daily living expenses.”
The government is also expanding its support for young people seeking jobs.
For job seekers who are in a job training program, the government will give stipends of a maximum of 600,000 won for six months. Currently only young people who makes less than 80 percent of the median income in Korea are eligible for such help. The new plan will expand benefits to all below the median.
BY LEE HO-JEONG [firstname.lastname@example.org]