[Budget Committee Interview] Park Jung "Need for Fiscal Expansion to Alleviate 3 High Burdens"

by Oh Jooyean

Published 26 Oct.2022 11:30(KST)

Updated 09 Mar.2023 11:25(KST)

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Park Jung Minju Budget Committee Secretary

Household Debt Reaches 1900 Trillion Won
Rising Steeper Than National Debt Increase
Debt Burden Relief Needed in Crisis Situation

Cutting Local Currency for Small Businesses
Is It Right to Reduce Corporate Tax?
Budget Should Change Amid High Interest Rates

Editor's NoteWith the ruling and opposition parties agreeing on the schedule for the Budget and Accounts Special Committee to review next year's budget bill, the 'budget war' will intensify starting next month. The ruling party emphasizes reducing spending to support the Yoon Seok-yeol administration's sound fiscal policy, while the opposition insists that government finances should be expanded amid the economic crisis. Particularly, perspectives on the budget cut for local currency support sharply diverge between the two sides. The opposition, protesting the prosecution's search of party headquarters, has carried out an unprecedented boycott of the president's policy speech. As the ruling and opposition parties continue their 'strong versus strong' confrontation, concerns are growing over whether the National Assembly can properly and timely review the Yoon Seok-yeol administration's first budget. We spoke with the budget review coordinators from both sides about the direction of the budget review.

Park Jung, the budget committee secretary of the Democratic Party of Korea, is attending and speaking at the '2023 Budget Proposal Debate' held at the National Assembly on the 25th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Oh Ju-yeon] Park Jung, the opposition coordinator of the National Assembly Budget and Accounts Special Committee, expressed a view completely opposite to the government's budget policy direction, saying, "In a situation of high inflation, high interest rates, and high exchange rates, fiscal expansion is necessary to ease the burden on households and help them endure the economic crisis."

After the '2023 Budget Bill Debate' held on the 25th at the National Assembly Members' Office Building, Park told reporters, "Currently, household debt stands at 1,900 trillion won, which is increasing faster than the national debt," emphasizing, "The role of the state is to take on household and personal debts during a crisis and then, once households endure healthily, to collect taxes again and restore fiscal soundness." He added, "Now is exactly the time when the state's role is needed," explaining, "This is not about blindly going for populism (fiscal expansion), but about overcoming this crisis well."

He particularly stressed that in next year's economic recession phase, 'reduced consumption' could worsen the recession and that the budget for the 'Local Love Gift Certificate Issuance Support Project,' which was completely cut from next year's budget, should be restored.

Park said, "Local currency started in four local governments and, due to positive response, has been implemented in all 17 metropolitan cities and provinces," adding, "In Gyeonggi Province, 90%, and in other regions over 70%, have evaluated it as a 'well-done policy,' and there has never been such a policy with such high public approval." He continued, "Local currency for small business owners and self-employed people must be preserved," questioning, "Is it right to cut this while reducing corporate taxes?"

The Democratic Party appears to focus on restoring the local currency budget, which was fully cut in this budget review, judging it effective in stimulating private consumption. Park said, "Complete cuts are obviously unacceptable," adding, "It is a good policy, so it must be preserved."

Park rated the government's next year's budget as "50 out of 100 points," saying, "I will strive to correct policies that go against desirable economic policies based on next year's economic outlook." He predicted that not only the local currency budget cut but also corporate tax cuts would be key issues.

The Democratic Party expects that due to the enforcement of the Corporate Tax Act, tax revenue will decrease by 618.2 billion won next year and by a total of 20.7374 trillion won by 2027. They explain this as a 'paradox' where the public must bear the tax revenue loss caused by so-called tax cuts for the wealthy.

Park said, "This budget was probably drafted based on budget data received from each ministry between March and May, when interest rates had only risen once," implying that the situation has changed, "The current government probably drafted it thinking 'We must be different from the previous administration,' but interest rates have since risen sharply." He added, "Since the train had already started running, the framework could not be changed," explaining, "The Democratic Party's position is that these things must be changed."

At the debate that day, Park also said, "The Democratic Party will conduct this budget review under three principles: people first, livelihood first, and economy first," adding, "We plan to carry out major cuts to the budget for the presidential office relocation and the Board of Audit and Inspection, which have nothing to do with people's livelihoods."