[Bill Cost Estimation Analysis] Yoon Administration's 130 Days: 75.6 Trillion Won... One-Third Level of Moon Administration

Comprehensive Survey of Bills Proposed by Lawmakers During 130 Days Since Moon and Yoon Governments Inauguration
Annual Average Cost Bills in Trillions: 17 in Previous Government, 4 in Current Government
Cost Estimation Bills Actually Increased in Current Government... Only 1-2 Bills Proposed for Fiscal Assistance

National Assembly Plenary Session / Photo by Dongju Yoon doso7@

[Asia Economy Reporters Bomryeong Geum, Juni Park, Intern Reporter Yunjin Kim] The estimated costs required to implement various legislative bills submitted to the National Assembly have significantly decreased compared to five years ago. It appears that the Yoon Seok-yeol administration's 'sound fiscal management' stance has also influenced bills proposed by lawmakers.

On the 11th, Asia Economy conducted a full survey through the National Assembly Bill Information System on bills submitted by lawmakers during the first 130 days after the inauguration of the Moon Jae-in government and the Yoon Seok-yeol government (May 10 to September 16 in 2017 and 2022, respectively), and examined the cost estimates. The total estimated cost for implementing the bills dropped sharply from 200.4493 trillion won to 75.6134 trillion won. This amount includes tax expenditures and revenue reductions. Bills are accompanied by cost estimates to determine whether they involve fiscal impact, which can be interpreted as a reduction in the fiscal burden required to implement the bills.

This reflects the government's policy direction. While the Moon Jae-in administration emphasized the role of fiscal policy in securing resources alongside welfare enhancement, the current administration focuses on reducing fiscal spending while promoting private sector activation.

At the beginning of a government term, it is essential to pause and review to implement national agendas. This is why bills proposed during this period attract attention. The significant difference in the scale of cost estimates attached to bills after the inauguration of the Moon Jae-in and Yoon Seok-yeol governments also reflects the national policy direction.

The number of bills with annual costs exceeding the trillion-won level was 17 immediately after the Moon Jae-in government took office in 2017. In contrast, after the Yoon Seok-yeol government took office, the number was only 4, showing a significant difference.

The previous government placed great emphasis on the role of government finances alongside welfare enhancement. The Moon Jae-in administration's 100 major national agendas included tailored social security, strengthening health insurance coverage, and public healthcare. The so-called 'Moon Jae-in Care,' which expanded health insurance coverage, is a representative example of the state's increased role. Additionally, to lead the early economic policy of income-led growth, the government expanded public job funding and increased unemployment benefit recipients.

Accordingly, immediately after the Moon Jae-in government took office, many bills involving significant fiscal impact were proposed, led by the then-ruling Democratic Party of Korea. These included amendments to the National Pension Act, which required over 36 trillion won annually, and the National Basic Livelihood Security Act. These bills contained provisions such as raising eligibility criteria for livelihood, education, and medical beneficiaries, and calculating income recognition for youth activity support allowances. Amendments to the Child Welfare Act, requiring 2.9 trillion won annually to provide allowances for children under five, and amendments to the Employment Insurance Act, requiring 2.5 trillion won annually to extend job-seeker benefit days, were also proposed.

Um Kyung-young, director of the Era Spirit Research Institute, explained, "2017 was right after the candlelight protests against the Park Geun-hye government, and with the Moon Jae-in government coming in, there was a widespread atmosphere in the National Assembly that tolerated increased budget spending. Many populist bills involving large budgets were proposed."

The current government strongly emphasizes 'sound fiscal management.' National debt, which was 600 trillion won, exceeded 1,000 trillion won during the previous administration, making it inevitable to reduce spending. Accordingly, there were more cases of opposition party lawmakers requesting cost estimates for their proposed bills than the ruling party, which must support the national policy direction.

Among the top 10 bills with the largest additional fiscal scale after the Yoon Seok-yeol government took office, eight were proposed by Democratic Party lawmakers. The top bill, proposed by Democratic Party lawmaker Kim Hoe-jae, includes expanding the age eligibility for child allowance recipients. Other bills related to welfare included operating special discount systems for public transportation fares and strengthening educational support for disabled university students.

'Revenue Reduction Bills' by Ruling Party, Car Individual Consumption Tax Law... Opposition Party Draws Attention with Securities Transaction Tax Abolition

However, participation by People Power Party lawmakers is notable in bills that reduce fiscal revenue. Lawmakers Jeong Woo-taek and Bae Jun-young proposed amendments to the Corporate Tax Act to simplify tax rate brackets and reduce the top rate. Lawmaker Ryu Seong-geol proposed extending the sunset clause for agricultural and fishery tax exemptions through amendments to the Restriction of Special Taxation Act, and fellow party member Seo Byung-soo proposed abolishing individual consumption tax on most automobiles through amendments to the Individual Consumption Tax Act. These moves support the Yoon Seok-yeol government's economic policy stance of easing corporate tax burdens to normalize tax rates. At the time of the Moon Jae-in government’s inauguration, lawmaker Yoon Han-hong also proposed amendments to the Individual Consumption Tax Act, which were expected to reduce tax revenue by over 6 trillion won annually.

Professor Shin Yul of Myongji University's Department of Political Science and Diplomacy analyzed, "The Yoon Seok-yeol government inevitably places great importance on the domestic economy and national debt trends amid the global economic crisis. It is focusing on fiscal soundness and crisis recovery, making it difficult to relatively increase welfare."

The Democratic Party places more emphasis on reducing individual tax burdens rather than corporate ones. Lawmaker Kim Du-kwan proposed amendments to the Income Tax Act, expected to reduce tax revenue by 21 trillion won. Lawmaker Ko Yong-jin proposed the abolition of the Securities Transaction Tax through the Securities Transaction Tax Act and amendments to the Special Rural Tax Act to exclude agricultural and fishery special taxes.

Number of Bills Requiring Cost Estimates Actually Increases... Fiscal Aid Bills Are Minimal

Although the total fiscal amount required to implement bills proposed under the current government has decreased, the number of bills requiring cost estimates has actually increased. During the first 130 days of the Moon Jae-in government, 2,412 bills were proposed, of which 820 required cost estimates. In contrast, during the same period after the Yoon Seok-yeol government took office, 1,698 bills were proposed, with 1,128 requiring cost estimates. This means the proportion of bills involving fiscal impact has increased. Accordingly, the average cost estimate per bill decreased from 890.9 billion won under the previous government to 284.3 billion won under the current government.

Bills that help increase fiscal revenue are very rare. In the early Moon Jae-in government, only two bills were classified as helpful for revenue expansion: an amendment to the Local Allocation Tax Act proposed by then-Minju Peace Party lawmaker Kim Kwang-soo and an amendment to the Income Tax Act proposed by former Future United Party lawmaker Lee Jong-gu. Under the current government, the only revenue-increasing bill was an amendment to the Gangwon Special Self-Governing Province Establishment Act proposed by Democratic Party lawmaker Heo Young.

As the number of bills requiring cost estimates increases, there is an analysis that careful attention is needed regarding laws involving fiscal impact. According to the 'Long-term National Debt Outlook from 2022 to 2070' submitted to the National Assembly Budget Office by People Power Party lawmaker Kim Sang-hoon of the Planning and Finance Committee, if the fiscal policies and systems of the Moon Jae-in government continue, national debt will exceed 2,939 trillion won by 2040, surpassing 100% of GDP, and reach 5,624 trillion won by 2060 and 7,137 trillion won by 2070 (an average annual increase of 4.0%). Fiscal rules and other safeguards remain far from being discussed.

However, there is also considerable opposition to the idea of indiscriminately disregarding bills that increase fiscal spending. Democratic Party lawmaker Yang Kyung-sook of the Planning and Finance Committee said, "It is problematic to pursue policies that cut taxes for ultra-rich large corporations while treating unavoidable fiscal spending as a factor undermining fiscal soundness. It is misleading to portray the Democratic Party government as merely being generous to the public and leaving behind enormous debt when the government cannot play a more active fiscal role."

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