Grants will go to all, but rich urged to give theirs back

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Grants will go to all, but rich urged to give theirs back

The ruling party and the administration agreed Wednesday to give coronavirus relief grants to everyone, while asking the wealthy to voluntarily give theirs back.

“We are pushing forward a plan to give emergency relief grants to all the people to uphold the principles of urgency and universality,” Rep. Cho Jeong-sik, chief policymaker of the ruling Democratic Party (DP), said. “We will also come up with a plan to reduce the fiscal burden by requesting leaders of our society and high-income earners to voluntarily surrender their payments.”

Prime Minister Chung Sye-kyun announced in a statement later in the day that the government will accept the plan if the National Assembly creates a system through which the rich can return their grants.

The ruling party and administration have been at odds over who should receive the grants. A one-time payment of gift certificates or coupons, which will top out at 1 million won ($816) for a household of four or more members, was planned to help weather the coronavirus crisis.

The government wanted to give the grants to 14.8 million families, the 70 percent of households with the lowest incomes. The DP wanted them given to everyone.

The government has proposed a second supplementary budget of 7.6 trillion won to pay for the grants for the 70 percent. If the grants are given to everyone, another 3 trillion won will be needed.

In order to persuade the Ministry of Economy and Finance, the DP proposed a plan in which the wealthy relinquish their grants. Those who express the intention to surrender the grants will be given tax deductions at the end of the year. The surrendered grants will be considered donations.

“We will draft a bill to revise the income tax law to consider the surrendered grants as donations and give tax deductions,” Cho said. The tax deduction rate for donations for the year-end tax report is 15 percent.

“The size of the supplementary budget should be decided based on the idea that all people will receive the grants,” said Cho. “We need to think about making additional adjustments on expenditures or issuing bonds to raise the extra budget.”

While the ruling party and administration were debating the issue, the Blue House was concerned that the payments were being slowed down.

“When President Moon Jae-in met with his aides [Wednesday] morning, he asked them to conclude the issue as soon as possible,” a presidential aide told the JoongAng Ilbo. After Moon’s order, the ruling party and the government struck a deal to skip the time-consuming process of selecting who should receive the grants.

After the decision was announced, Deputy Prime Minister and Finance Minister Hong Nam-ki expressed his bitterness. “I think it is inappropriate for me to elaborate on my opinion at this time, so I will refrain from making comments,” he said.

Hong has been a strong advocate that the grants should only be paid to some, not all.

The main opposition United Future Party (UFP) said it agrees with the Finance Ministry’s concerns about the DP’s relying on the rich to surrender their grants.

“I don’t understand how the government can repay over 3 trillion won of bonds by collecting voluntary relinquishments,” said UFP Rep. Kim Jae-won, chairman of the National Assembly’s Special Committee on Budget and Accounts.

Other UFP members were also critical about the plan. “It will first divide the people between high-income earners and low-income earners,” said Rep. Choo Kyung-ho, the UFP’s chief negotiator of the National Assembly’s Strategy and Finance Committee.

“And it will make the high-income earners who choose not to surrender the grants a target of criticism. Instead of presenting a reasonable plan that will ease the fiscal burden and help low-income families, the DP and the government are trying to split the people and hide the problem.”

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