Consideration of Direct Rent Support Included in 3rd Disaster Relief Fund... Expected to Exceed 4 Trillion Won

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] It has been reported that the third round of disaster relief funds for small business owners and self-employed individuals, scheduled for disbursement in January, will include direct support funds for rent. In this regard, it is expected that the scale of the third disaster relief fund will exceed at least 4 trillion won. As the damage from the third wave of the novel coronavirus infection (COVID-19) grows, the scope and scale of what must be covered by the disaster relief funds are also expanding.

According to the Democratic Party of Korea and government authorities on the 20th, when the COVID-19 small business damage support funds are disbursed next month, the government is reportedly reviewing internally a plan to partially reflect direct rent support funds for tenants.

Tax support for landlords who reduce rent and direct rent support for tenants are being considered. Additionally, if social distancing is raised to level 3, there is also discussion about preparing a supplementary budget early in the year to actively provide direct rent support.

This discussion aligns with President Moon Jae-in's remarks that there is a need to go beyond existing measures such as tax credits for 'kind landlords' and to consider more proactive steps.

Rent support policies for small business owners are broadly divided into indirect support for landlords and direct support for tenants. One of the support measures for landlords is the 'kind landlord' policy, which provides a tax credit of 50% of the rent reduction amount if the building owner lowers the rent. However, there are efforts to explore ways to significantly increase the scale of support to encourage more active participation from landlords.

The core discussion currently centers on policies that directly support fixed costs such as rent for tenants who could not operate due to government-ordered business suspension or restrictions. The government is reportedly paying close attention to cases such as Germany, which supports up to 90% of fixed costs for businesses forced to close due to government measures, and Canada, where the government compensates 50% if rent is reduced by more than 75%.

The government has also begun internal reviews to implement rent support measures for small business owners. A Ministry of Economy and Finance official said, "As the damage from the third wave of COVID-19 increases, the range and extent of affected groups have also expanded. Since there is growing demand for support such as rent for small business owners, there are more internal matters to review during the process of preparing the third relief fund." The issue of how to legally and institutionally support small business owners' rent in special situations like the COVID-19 crisis is also under consideration.

Within the ruling party, there are opinions that if the scale of rent support increases, a supplementary budget should be prepared early next year. This is a measure considering that the damage from the third wave has already surpassed the level of the second wave, and with the COVID-19 spread not subsiding, even level 3 social distancing is being considered. Whether the current social distancing level is maintained for a certain period or raised to level 3, it is seen as exceeding the level that can be mobilized from the contingency funds allocated in next year’s budget.

Inside the government, reflecting the growing damage, there are also discussions about expanding the support target beyond small business owners to include vulnerable employment groups such as special-type workers (teukgo) and low-income groups.

Considering this demand, it is expected that the scale of the third disaster relief fund will exceed at least 4 trillion won. The small business support fund allocated in next year’s budget is 3 trillion won. In addition, there are available resources such as 500 billion won of unused Small Business New Hope Funds from this year, other contingency funds, and surplus funds from various funds, making it possible to mobilize around 4 to 5 trillion won. As demands for the scope and level of support increase, there is also speculation that the finalization of the third relief fund plan may be delayed until next year. A Ministry of Economy and Finance official said, "The small business damage support measures are currently under multifaceted review regarding the target and scale of support, and no specific direction has been decided yet," adding, "There are still many matters to be further reviewed."

This content was produced with the assistance of AI translation services.