‘Disaster allowance’ proposal for bottom 70 percent confuses many

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‘Disaster allowance’ proposal for bottom 70 percent confuses many

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The government’s recent decision to provide cash handouts and other subsidies to a majority of Koreans based on monthly household income has prompted widespread confusion over the methods for determining who gets what.

The government on Monday announced its plans to spend 9.1 trillion won ($7.4 billion) on an “emergency disaster allowance” for the bottom 70 percent of households.

President Moon Jae-in’s administration and the relevant ministry officials, however, appear undecided on how to go about defining the bottom 70 percent.

Hong Nam-ki, the deputy prime minister of economic affairs, failed to answer that question at an emergency economic council meeting on Monday. Minister Park Neung-hoo of the Ministry of Health and Welfare later said the payments will be based on a worker’s “daily income.”

Officials were also unable to say what income would be eligible to determine the amount of the subsidies.

Park told reporters the government will come up with “socially fair” criteria that considers both property and income, so that the money will be offered to those desperately in need.

However, the Ministry of Economy and Finance reversed course the following day.

Koo Yun-cheol, the vice finance minister, said in a Tuesday radio broadcast that the government may not include an individual’s “property, capital gains or vehicle taxes” in the equation.

The Ministry of Health and Welfare, which is responsible for coming up with the precise criteria, proceeded to muddy the waters further.

“We are gathering ideas that can meet the value of rationality and urgency at the same time,” the ministry explained Tuesday at a regular briefing in the administrative office in Sejong.

In the absence of clear guidelines from the government, individuals have rushed to the Welfare Ministry’s website to calculate their recognized income levels. Those are defined as the sum of income earned and the value of their property.

The server lagged Wednesday amid the sudden surge of visitors. “Coronavirus emergency disaster allowance” was the most-searched keyword this week on the website.

The Ministry of Economy and Finance rejected the idea that there was confusion between ministry officials and said it has maintained its position to provide subsidies to 70 percent of the population.

“The plan was abruptly changed during meetings with ministry officials. We thought it was best to announce the core principle first,” an official at the Ministry of Economy and Finance said.

Critics claim that the definition of the “bottom 70 percent” is too volatile, as there are many factors - including cars, monthly salaries and housing prices - that come into play when assessing income. Wealth also changes over time, meaning the total can substantially change depending on when an individual’s wealth is calculated.

Others say the confusion was unavoidable, noting the administration fought with the opposition over disaster relief but failed to set exact amounts and criteria for the allowances.

“The Blue House urgently dropped the idea of ‘the bottom 70 percent’ to appeal [to voters] ahead of the general elections, but the administration did not have the ability to back it up,” said Kang Sung-jin an economics professor at Korea University.

BY HA NAM-HYUN, KANG JAE-EUN [kang.jaeeun@joongang.co.kr]

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