Who will bear the burden?CHANG CHUNG-HOON
The author is a deputy industry team editor at the JoongAng Ilbo.
Next year’s government budget is expected to exceed 500 trillion won ($4.1 billion) for the first time. As this year’s 469 trillion-won budget was called a “super budget,” next year’s 513 trillion won would be an “ultra-super budget.” The Moon Jae-in administration and ruling Democratic Party are pushing for the ultra-super budget as a slump in domestic consumption and low growth are worsening and exports are decreasing due to the U.S.-China trade war.
The government’s rate of budget increase is dizzying. In 2017, it started with a budget that exceeded 400 trillion won for the first time. When next year’s budget is finalized, 113 trillion won will be added in just three years. Government budget hit 200 trillion won in 2005 for the first time, 300 trillion won in 2011 and 400 trillion won in 2017. It took six years to add 100 trillion won. But in this administration, the cycle was shortened to 3 years.
While the budget is rapidly increasing, I wonder if the economy will be revived. Next year’s budget focuses on creating social jobs, reinforcing income basis for the low-income class and nurturing eight leading industries, including bio and health. It only changed the packaging for its economic boosters — income-led growth, fair economy, and innovative growth — which the government advocated for this year’s super budget. Newly added factors for next year’s budget are new industry promotion for hydrogen, 5G, artificial intelligence, and assistance for the material and parts industry.
As the government was short even with this year’s super budget, it used nearly 6 trillion won in supplementary budget. But small business owners are complaining, and many factories in the capital region are for sale, much less rejuvenating the economy. Income-driven growth and fair economy are fancy slogans, but employment and income polarization are the worst they’ve ever been. Innovative growth is blocked by various regulations. As the first half of this year has concluded, the report card on the tremendous budget is devastating.
A red light is blinking for tax revenue to back government budget. Companies are struggling with worsening performance. It is expected that corporate tax, which makes up one fourth of the total tax revenue, will decrease. Operating profit of the 574 Kospi-listed companies in the first half decreased by 37 percent compared to last year. Operating profits of Samsung Electronics and SK Hynix — which covered a whopping 20 percent of the total corporate tax — decreased by 58 percent and 80 percent, respectively. The two companies paid 9 trillion won in corporate tax in the second half of last year, but the sum is expected to be less than 2 trillion won this year.
When government spending increases and tax revenue shrinks, the burden is left on the citizens and the future generation. But the government is insisting on using the budget on fruitless policies next year too. Citizens and young people are still struggling. For how long will the government make them suffer?
JoongAng Ilbo, Aug. 28, Page 28