Budget for New Yeongbingwan Building and Corporate Tax Cuts... Clash Between Ruling and Opposition Parties at Ministry of Economy and Finance Audit

Yeo "Corporate tax is a tax cut for the rich" vs Chu "Corporate investment increased... Cannot agree 'big companies = rich'"
Clash over Yeongbingwan new building budget and local currency... Chu "Not an issue to be decided behind closed doors"

Deputy Prime Minister for Economy Choo Kyung-ho is attending the audit of the Ministry of Economy and Finance held at the National Assembly on the 5th, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

[Asia Economy Sejong=Reporter Kwon Haeyoung] In the first National Assembly audit of the Ministry of Economy and Finance under the Yoon Seok-yeol administration, fierce debates continued between the Ministry and opposition parties over 'tax cuts' and the 'budget for the new presidential guesthouse.' The opposition criticized the corporate tax cuts as 'tax cuts for the rich,' citing the recent case of the UK withdrawing its tax cut plan. Amid growing concerns about an economic crisis due to high inflation, high exchange rates, and high interest rates, voices urging the economic team to take measures also emerged.

Opposition: "Corporate tax cuts are tax cuts for the rich" vs. Choo: "Corporate investment increased... Disagree with 'big corporations = rich'"

According to the Ministry of Economy and Finance on the 9th, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho emphasized the necessity of corporate tax cuts during the two-day audit held on the 4th and 5th.

Deputy Prime Minister Choo said, "Corporate investment increased from 33 trillion won in 2009 to 40 trillion won in 2013 due to corporate tax cuts under the Lee Myung-bak administration," adding, "Corporate tax cuts are effective for expanding investment, creating jobs, and economic growth." He emphasized, "OECD countries have continuously lowered corporate taxes because it helps expand investment and revitalize the economy," and "On the other hand, when our country raised the corporate tax rate to 25% (top rate), our international tax competitiveness dropped by 10 levels."

Regarding the Democratic Party's criticism that the Lee Myung-bak administration's corporate tax cuts were used more to increase corporate retained earnings than investment, he rebutted, "Corporate investment increased, and I am confident of its effects," adding, "Our companies' retained earnings are actually lower compared to foreign companies."

On the controversy over 'tax cuts for the rich,' the government and ruling party clashed. Deputy Prime Minister Choo responded, "Under the tax reform plan, large corporations receive about a 10% tax reduction benefit, but medium-sized and small businesses receive a 12% tax reduction effect," and "I do not agree with the frame that views large corporations as rich." Regarding the income tax reform plan, he emphasized, "The tax base was adjusted to reduce the burden on lower-income brackets," adding, "The tax burden for those earning 30 million won decreases by 27%, while for high-income earners it is only 1-5%, so the tax cut effect is greater for the middle and lower classes."

Choo: "Recognizes the seriousness of the economic situation"…Dismisses possibility of foreign exchange crisis

Amid rapidly worsening recent economic conditions such as high inflation, high interest rates, and high exchange rates, the opposition criticized the government for its complacent perception of the economic crisis.

Deputy Prime Minister Choo, responding to criticism that there is a large gap between market and government perceptions of the economic crisis, said, "I fully agree that we must have an extraordinary awareness and respond accordingly," but dismissed the possibility of a foreign exchange crisis. He stated, "However, it is not to the extent of a foreign exchange crisis like in the past," and urged, "Please do not be excessively anxious." Regarding President Yoon Seok-yeol's perception of the current economic situation, he explained, "I report weekly and preside over meetings directly," adding, "He recognizes the seriousness of the situation and has ordered a 24-hour emergency response system to be activated."

Calls for measures against inflation exceeding 5% were also raised. He responded, "Although the overall price level is high, it will peak by October at the latest, or hopefully the peak has already passed," and "Although prices are high, I expect them to gradually decrease."

He also repeatedly emphasized the need for measures to prevent market 'herding' caused by the recent sharp rise in the won-dollar exchange rate. In this process, he clearly stated that a decrease in foreign exchange reserves was inevitable. Deputy Prime Minister Choo explained, "If the exchange rate rapidly concentrates, it limits the predictability of economic activities and increases volatility, so necessary market stabilization measures will be taken," adding, "Foreign exchange reserves exist to be used when there is a shortage of foreign currency funds domestically and normal market transactions do not function, and appropriate market stabilization measures will be taken when necessary."

Clash over budget for new presidential guesthouse and local currency…Choo: "Not an issue to be handled behind closed doors"

The Ministry of Economy and Finance and the opposition also clashed over political issues such as the new presidential guesthouse construction and local currency budgets. The opposition raised suspicions of 'non-official influence' related to the recently canceled budget for the new presidential guesthouse, and Deputy Prime Minister Choo rebutted, "The budget for the presidential guesthouse was thoroughly discussed with the Ministry of Economy and Finance."

Deputy Prime Minister Choo said, "Like other project budgets, we conducted sufficient consultations with working-level officials and prepared the budget, but I cannot disclose the details one by one because it is a security facility." He explained, "There were discussions between the working-level officials of the Presidential Office and the Ministry of Economy and Finance around mid to late July, and I was informed at some point in August," adding, "In August, the preliminary feasibility study was exempted, and the project name and amount were reported, but this fact was highlighted in early September."

Regarding the Democratic Party's claim that the cost of relocating the Presidential Office exceeds 1 trillion won, he rebutted, "I do not agree," and said, "I do not understand how such a calculation was made." He added, "If the budget is necessary for the relocation of the Presidential Office, it will naturally be submitted to the National Assembly and necessary understanding will be sought," emphasizing, "Since it involves taxpayers' money, it is not an issue to be handled behind closed doors."

In response to the opposition's criticism of the cut in next year's national budget support for local currency, he explained that local governments can use their own budgets for local currency support if needed. Deputy Prime Minister Choo said, "Next year, the funds transferred from the central government to local governments will increase by 11 trillion won compared to this year," adding, "Local governments must allocate and decide on resources according to their priorities."

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