Majority of supplementary budget to go to helping small businesses

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Majority of supplementary budget to go to helping small businesses

Finance Minister Hong Nam-ki, center, announces a 14 trillion-won supplementary budget, the first in 2022 and the seventh since the outbreak of Covid-19 in 2020, at the government office in Seoul on Friday. [MINISTRY OF ECONOMY AND FINANCE]

Finance Minister Hong Nam-ki, center, announces a 14 trillion-won supplementary budget, the first in 2022 and the seventh since the outbreak of Covid-19 in 2020, at the government office in Seoul on Friday. [MINISTRY OF ECONOMY AND FINANCE]

Of the 14 trillion-won ($11.7 billion) supplementary budget 82 percent, or 11.5 trillion won, will be used for small businesses affected by Covid-19 restrictions.  
 
The extra budget is the first for this year and the seventh since the outbreak of the pandemic, 
 
The funding for small businesses includes an emergency handout of 3 million won to help ease fixed costs including rent and labor expenses as well as business owners' livelihoods.
 
The budget for immediate handouts is 9.6 trillion won. The government estimates some 3.2 million business owners will be recipients.  
 
Additionally, 1.9 trillion won of the extra budget will be used to compensate the losses that small shop owners have suffered.
 
The government stressed that the total that will be used in compensating businesses' losses due to Covid-19 amounts to 5.1 trillion won, when taking into consideration the 2.2 trillion won from this year’s main budget as well as an additional 1 trillion won provided through government funds
 
Some 1.5 trillion won of extra budget will be used in securing additional sick beds for Covid-19 patients and other quarantine efforts including pills to treat 400,000 Covid-19 patients.  
 
With the additional purchase of Covid-19 pills, the government has now secured enough to treat 1 million patients.  
 
Nearly 79 percent of the extra budget or 11 trillion won will be funded through government bonds.  
 
“We have created a supplementary budget in the first month of 2022 as small business owners are now reaching their limits,” Finance Minister Hong Nam-ki said Friday. “The people that were directly affected by the strengthened quarantine measures are small shop owners, who have cooperated with restrictions.
 
“Considering the limited financial resources, we have decided to provide more support to those most affected.”  
 
Hong said that although there will be demands from lawmakers to increase the size of the latest extra budget, the 608 trillion-won main budget for this year is enough to cover other support related to Covid-19.  
 
“When we determined the size of the extra budget, we took into account the level of damage that self-employed businesses have suffered, the amount of extra taxes collected [in 2021] and the 608 trillion-won budget [for 2022], comprehensively,” Hong said.  
 
He added that other macroeconomic factors such as inflation were also considered when determining the size of the supplementary budget.  
 
The Democratic Party’s presidential candidate Lee Jae-myung has continued to demand that the government increase its extra budget citing the additional taxes that the government collected last year.  
 
Taxes collected in the first 11 months have already exceeded the government’s estimated taxes to be collected for all of 2021.  
 
Through November, the government collected 323.4 trillion won. The government forecast 314.2 trillion won for the entire year.  
 
Lee has argued that the government has more room to spare and asked for a supplementary budget between 25 and 30 trillion won.  
 
“The government's proposed 14 trillion won is unfortunately too little,” Lee said Tuesday. “It is the responsibility of a country to protect the lives of the public from diseases. I can’t shake the thought that this responsibility has been mostly shouldered by the people, especially the self-employed and small business owners who are the most vulnerable.”  
 
Finance Minister Hong stressed that even though the government collected more than it had projected in taxes last year, under the law, 40 percent of the additional taxes are to be transferred to local governments.  
 
“Whether to use the net budget surplus in paying off the government bonds or to use it for another supplementary budget should be decided according to the situation,” Hong said.  
 
“We hope that the government proposal will be respected,” Hong added.  
 
 

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]
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