Conflict grows between gov’t and ruling party over COVID-19 relief funds

Nov 18, 2021, 09:05 am

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Vice Prime Minister for Economy and Finance Minister Hong Nam-ki visits a gas station in Seoul to check prices of gas in an effort to stabilize soaring consumer prices on November 17, 2021./ Source: The Ministry of Economy and Finance

AsiaToday reporter Lee Ji-hoon

The ruling Democratic Party (DP) is expected to increase pressure on the government to provide another round of emergency cash handouts to all people with excess tax revenue as this year’s excess tax revenue is expected to be 19 trillion won more than the ministry’s previous estimate. However, the conflict between the ruling party and the government is expected to intensify as the government claims the excess tax revenue should be selectively provided to those hit by the pandemic.

“It is shocking that the excess tax revenue is expected to reach 50 trillion won,” said DP Chairman Song Young-gil during a meeting of the heads of the Election Campaign Committee held at the National Assembly on Wednesday. “The finance ministry’s passive attitude should be checked definitely,” Song said. His comment came a day after DP floor leader Rep. Yun Ho-jung pressed the government claiming that a state investigation into the ministry is needed for the provision of universal COVID-19 relief funds.

The DP has been pushing the ministry to provide the universal relief funds with the excess tax revenue, saying it accounts to 19 trillion won. In response, the finance ministry has been consistent with vague response. Vice Prime Minister for Economy and Finance Minister Hong Nam-ki stated that the excess tax revenue compared to the second supplementary budget would “likely to exceed 10 trillion won a little” in a policy query session held on November 8. However, he broadened the scope few days later in a query session held on November 10, saying there would be 10 trillion-won level of excess tax revenue.

The ministry continued Tuesday that the excess tax revenue would reach nearly 10 trillion won. However, when the ruling party proposed a specific amount of excess tax revenue of 19 trillion won, the ministry changed its words and said, “Due to a stronger-than-expected economic recovery and asset market factors after the second supplementary budget, an excess tax revenue of about 19 trillion won compared to the supplementary budget is expected.” It reversed its views and provided a reason to the ruling party to provide universal COVID-19 relief funds.

However, as Finance Minister Hong Nam-ki expressed his opposition to the idea of providing universal stimulus checks, the conflict between the party and the government is expected to continue.

“About 40 percent of the 19 trillion won in excess tax revenue, or 7.6 trillion won, will be distributed to local governments as grants,” Hong told reporters. “Excluding it, about 12 to 13 trillion won at the most would be available.”

He added that a significant part of the excess tax revenue would first be used to compensate small merchants for their COVID-19 business losses and then be transferred to next year’s tax revenue.

#universal COVID-19 relief fund #excess tax revenue