[2nd Supplementary Budget] Subsidies and Cashback... Full Effort to Boost Spending in Q3 by Injecting Money

[Sejong=Asia Economy Reporters Son Seon-hee and Moon Chae-seok] The second supplementary budget (supplementary budget) proposal, totaling 33 trillion won, focuses on "stimulating consumption" in response to the economic recovery phase following the distribution of COVID-19 vaccines. It has mobilized available resources to the maximum extent, including this year's excess tax revenue of 31.5 trillion won, last year's global surplus (1.7 trillion won), and fund resources (1.8 trillion won). Of this, about half of the total resources, 15.7 trillion won, will be invested in the "COVID-19 Damage Support 3-Pack." This scale far exceeds the single supplementary budgets prepared last year (1st supplementary budget 11.7 trillion won, 2nd supplementary budget 12.2 trillion won).

◆Up to 9 million won paid to small business owners... Total investment of 3.9 trillion won= To support small business owners and self-employed people who suffered damage due to government quarantine measures, a total of 3.9 trillion won will be invested. A total of 1.13 million small business owners in management crisis industries such as travel and culture, who have been subject to business suspension or restriction measures even once since August last year, or whose sales have significantly decreased (200,000 in business suspension industries, 760,000 in business restriction industries, 170,000 in management crisis industries) are eligible. In particular, for businesses subject to gathering bans, they can receive up to 9 million won in "Hope Recovery Fund," which is 4 million won more than the Support Fund Plus paid in the first supplementary budget. The supplementary budget also includes 600 billion won for compensation costs to support the decrease in business income (including additional labor and rent costs) due to quarantine measures, according to the amendment of the Small Business Support Act.

The COVID-19 coexistence national support fund, which the ruling party and government negotiated until the last minute regarding the scope of support, was finally agreed to target "the bottom 80% of household income," with resources of 10.4 trillion won (8.1 trillion won national funds + 2.3 trillion won local funds) invested. The support amount is 250,000 won per person. Unlike the nationwide disaster support fund paid last year, there is no cap per household, so a five-person household can receive 1.25 million won. In addition, low-income groups will receive an additional 100,000 won per person as consumption plus funds.

The government announced plans to select recipients using health insurance premiums from workplace and regional subscribers, but detailed criteria for dual-income households and youth have not yet been finalized. Therefore, a cross-ministerial supplementary budget task force (TF) team led by Deputy Minister of the Ministry of the Interior and Safety Lee Jae-young will be launched to establish detailed criteria for recipient selection and execution.

◆"Spend more, get cashback"... Targeting high-income groups with sufficient consumption capacity= For high-income groups (top 20% income) excluded from this support fund, temporary credit card cashback benefits will be provided. This policy aims to maximize third-quarter consumption by targeting relatively high-income groups with sufficient consumption capacity.

For monthly card usage exceeding the average monthly card usage in the second quarter by more than 3%, 10% cashback will be refunded. Up to 100,000 won per month for three months (July to September), with a maximum of 300,000 won, will be paid, and the required budget is 1.1 trillion won. If the allocated budget is exceeded, the program may end early.

However, the government explained that to preserve the spirit of "coexistence consumption," consumption at department stores, large marts, specialty stores, entertainment establishments, etc., will be excluded. Detailed criteria for specific usage locations will be discussed and finalized by the cross-ministerial supplementary budget TF.

Along with consumption, 1.1 trillion won will be invested in employment, a key sector for domestic demand recovery. It will support the creation of 164,000 new jobs in areas such as youth employment and vulnerable employment groups, and support the training of 88,000 personnel in fields with high on-site demand such as software (SW) and shipbuilding. Additionally, 400 billion won will be provided to 153,000 people for employment retention support funds, vocational training living expenses, and other measures to maintain jobs and protect the unemployed.

◆4.4 trillion won invested in vaccines and quarantine support... Up to 440 million won compensation for death= The budget directly related to COVID-19 vaccines and quarantine totals 4.4 trillion won, including ▲ 2 trillion won for vaccine purchase (192 million doses), vaccination, and damage compensation ▲ 2.2 trillion won for expanding COVID-19 diagnostic testing, supporting isolated individuals' living expenses, and compensating medical institutions for losses ▲ 200 billion won for supporting vaccine manufacturing and development workforce training, clinical development, and advance vaccine purchase.

First, the number of public vaccination centers will be increased from the existing 267 to 282, and vaccination at private consigned medical institutions will be expanded. Compensation for adverse reaction damages is up to 44 million won for death or disability caused by vaccination, and up to 10 million won for treatment costs if severe adverse reactions occur without sufficient causal evidence. The budget for this compensation is set at 18.1 billion won. A total of 1.3 trillion won is allocated for expanding testing and supporting isolated individuals' living expenses, and 900 billion won is secured to secure treatment beds at frontline medical institutions and alleviate financial burdens.

208 billion won will be invested in essential facilities and equipment for vaccine and raw material production and workforce training for vaccine manufacturing and development processes. A budget of 98 billion won is also prepared to support clinical costs for companies with a high possibility of entering phase 3 clinical trials for domestic vaccine development. Additionally, based on phase 2 interim results, comprehensive reviews of safety, efficacy, success probability, ease of vaccination, development schedule, and price will be conducted to prepare for domestic vaccine development, and an advance purchase of 72 billion won is planned.

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