[Q&A] Government: "Disaster Relief Funds Should Be Targeted Even If Bottom 81% Income Group Does Not Receive Them"

"Refunding After Nationwide Payment, Practically Difficult"
Considering Equity Between Dual-Income and Single-Income Households

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The government stated that the selection of the bottom 80% income group is "a problem inherent in all projects that select beneficiaries based on property and income." Additionally, it added, "It is practically difficult to recover the funds through taxation after providing payments to the entire population."

On the 4th, the government released the joint "10 Questions and Answers on the COVID-19 Coexistence National Support Fund" from related ministries, expressing this position.

▲What is the difference from last year's nationwide disaster relief fund?

=The support target is households in the bottom 80% income bracket, and 250,000 KRW per person is provided without limit for a 4-person household. A 5-person household receives 1,250,000 KRW. Last year, payments were made uniformly to the head of the household, but this time adults receive payments individually. Minors receive support through the head of the household. This was considered because uniform payment to the head of the household could make actual payment to the individual difficult due to reasons such as disappearance or separation. Basic livelihood security recipients, near-poverty groups, and single-parent families will receive an additional 100,000 KRW per person.

▲The bottom 80% receive support, but the 81% do not.

=This is a problem inherent in all projects that select beneficiaries based on property and income. The basic pension supports the bottom 70% of elderly income, and the national scholarship provides differentiated support according to income levels. Even with these issues, it is necessary to select and screen beneficiaries according to the purpose of the project. Setting appropriate criteria is rather rational. However, since uniform criteria cannot reflect reality 100%, an appeal procedure will be actively implemented for relief.

▲What about providing payments to the entire population and recovering funds from the top 20% through taxes?

=The National Support Fund is exempt from taxation under the current Income Tax Act. To recover funds, an amendment to the Income Tax Act is necessary. Even if the Income Tax Act is amended, since the support fund is selected on a household basis and income tax is imposed on an individual basis, recovery through taxation is practically difficult.

▲Why use health insurance premiums as the selection criterion?

=Because everyone is enrolled, rapid beneficiary selection and timely payment are possible without building an additional system. The fact that the health insurance premiums of regional subscribers are based on 2019 comprehensive income and do not reflect the latest income information, as well as fairness in the imposition system between regional subscribers and others, will be actively supplemented. Measures to exclude high-asset individuals through cutoffs are being considered. When the selection criteria were announced last year, cutoffs were proposed as a property tax base exceeding 900 million KRW and financial income subject to comprehensive income tax exceeding 20 million KRW.

▲Does it have to be health insurance premiums?

=Health insurance premiums are almost the only alternative for selecting the bottom 80% income group. Conducting a full survey of income and property for all households is administratively difficult, and excluding only high-income earners or high-asset individuals by selecting those with income over 100 million KRW or property over 1 billion KRW has the disadvantage of covering only about 5% of the entire population.

▲When will the household insurance premium criteria be announced?

=To announce the health insurance premium criteria at the time of the supplementary budget announcement on the 1st, the May premiums must be used as the basis. The June premiums are finalized on the 10th. The criteria must be based on health insurance premiums that correspond to the policy announcement timing and reflect the latest income information to prevent unnecessary complaints and administrative waste. Based on the May premiums and resident registration information, a rough design shows the median income standard at about 180%. After discussions by the government-wide task force (TF), the criteria will be announced around late July reflecting the June premiums and household information.

▲Why select by household?

=A household is the minimum community that shares income and property. If selection is based on individual income and property, selection criteria vary by household size, causing fairness controversies. If selected individually, a high-asset individual may be excluded from support, but their spouse or children sharing income and property may be eligible.

▲There are criticisms that dual-income households are disadvantaged.

=Discussions will consider fairness with single-income households and the actual income situation of dual-income households. When the nationwide disaster relief fund was paid last year, there were complaints requesting separation of dual-income households with different living expenses because payment amounts differed by household members. In that case, dual-income households living in different cities with separate livelihoods were recognized for household separation upon request. This will be applied similarly this year.

▲There are concerns that regional subscribers are disadvantaged due to this year's sharp rise in official land prices.

=The 2021 official land prices will be reflected from the November health insurance premiums. This year's official land price increase is unrelated to the current regional subscriber premiums.

▲When and how will payments be made?

=We will prepare without delay so that payments can begin within a month after the supplementary budget passes. The payment method will be similar to last year, allowing selection among credit/debit cards, prepaid cards, and local gift certificates after online and offline applications. The usage period and restrictions will follow last year's nationwide disaster relief fund case, but improvements will be reviewed and supplemented. Last year's support fund was valid for 3-4 months from early May to the end of August, and usage was restricted in department stores, large marts, and entertainment establishments.

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