Second Supplementary Budget of 30 Trillion+α This Year... 'Youth Supplementary Budget' Is Coming

Excess Tax Revenue of 32 Trillion Won Likely to Be Allocated... Comprehensive Package Measures for Small Business Owners and Youth Announced

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[Asia Economy Reporter Jang Sehee] Half of the projects in this year's second supplementary budget proposed by the government and the ruling party are expected to focus on youth-related issues. Comprehensive measures addressing housing, asset formation, and more for people in their 20s and 30s are being discussed. The government is considering the supplementary budget within the range of 32 trillion won, which is the expected excess tax revenue for this year. This includes approximately 12 trillion won from local allocation tax and local fiscal grants.

A government official stated on the 7th, "Along with support for small business recovery, a comprehensive package of support measures for youth will be included," adding, "We are preparing all-around measures including jobs, housing, and asset formation." Housing support measures under discussion include youth-specialized housing in urban areas and dormitory supply for university students. There is also significant possibility that plans to help youth accumulate lump sums, such as Hope Savings Accounts and Youth Savings Accounts, will be included.

The ruling party and government are placing emphasis on youth measures largely due to losing the votes of the 20s and 30s age group in the April 7 by-elections. In this context, it is reported that the Democratic Party of Korea insisted on preparing a comprehensive youth policy first. The government also agreed on the need to create various opportunities including youth jobs, housing, and asset formation. As part of youth support measures, the government has decided to provide a special incentive of 750,000 won per person per month for one year to companies that newly hire youth as regular employees starting next month.

Besides youth measures, the government and ruling party reportedly agree on including disaster relief payments, compensation and additional support for small business losses, support for travel, tourism, performance, and arts industries, and measures to resolve income polarization between social classes in the supplementary budget.

However, there is no consensus on the scale of funding. The government believes it is appropriate to provide strong support to affected groups with limited resources, while the ruling party insists on distributing nationwide disaster relief payments to enhance policy effectiveness. Therefore, how to use the approximately 30 trillion won in excess tax revenue is expected to be a key issue in future government-ruling party discussions.

In this regard, it has been confirmed that the government is considering a method of distributing disaster relief payments to households based on certain criteria, such as the bottom 50-70% income bracket. The Ministry of Economy and Finance proposed the bottom 70% income bracket as the criterion for disaster relief payments during last year's second supplementary budget as well. At that time, a total budget of 9.7 trillion won was allocated, including 7.6 trillion won from the central government and 2.1 trillion won from local governments.

Academics also predict that the consumption effect of nationwide disaster relief payments will be limited. Professor Lee In-ho of Seoul National University’s Department of Economics emphasized, "If disaster relief payments are given to people who already have money, only substitution effects occur without additional consumption," adding, "Since resources are insufficient and consumption is already recovering, nationwide disaster relief payments do not seem appropriate."

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