Next Year's Budget Agreement 'Critical Juncture'... Speaker Kim Jin-pyo Presents 'Final Mediation Proposal'

Chairman Kim Proposes Negotiation Plan
'Preliminary Budget Allocation for Enforcement Decree Agencies + 1%p Reduction in Corporate Tax Top Rate'
If Ruling and Opposition Agree, Could Be Processed Tomorrow
Ruling and Opposition Floor Leaders React with Doubt, "We Will Review It"

[Image source=Yonhap News]

[Asia Economy reporters Naju-seok and Kwon Hyun-ji] In the tense standoff over the budget bill, Speaker of the National Assembly Kim Jin-pyo proposed negotiating cards including a 1 percentage point reduction in the top corporate tax rate and the allocation of contingency funds for agencies established by presidential decree. The ruling and opposition party leadership agreed to conduct a final review of the Speaker’s mediation proposal.

On the 15th, Speaker Kim Jin-pyo met with Joo Ho-young, floor leader of the People Power Party, and Park Hong-geun, floor leader of the Democratic Party of Korea, at the National Assembly and presented a final negotiation proposal on the budget bill. Speaker Kim said, “With the sincere intention that the ruling and opposition parties must agree on the budget to revive the difficult livelihood economy, I am presenting the last adjustment plan as the Speaker,” adding, “Regarding the budgets of agencies established by presidential decree without legal amendment, I suggest that the ruling and opposition parties reach an agreement to resolve this legislatively or, until a decision is made by a constitutionally authorized institution, spend the budget from contingency funds.”

He continued, “Regarding the top corporate tax rate, I proposed an adjustment plan to amend the law but defer the 3 percentage point reduction in the government’s plan for two years due to next year’s difficult fiscal conditions. If the Democratic Party finds this unacceptable, I hope at least a 1 percentage point reduction can be made to serve as a catalyst to accelerate foreign direct investment.” Speaker Kim added, “If the rate is reduced by 1 percentage point, local governments also have additional exemption authority under the Local Tax Act, so they can apply incentives to attract foreign investment through ordinance amendments.”

Speaker Kim stated, “If the two floor leaders reach an agreement today and announce the agreement to the public, I believe the budget bill can be processed by tomorrow at the latest.”

Although the floor leaders of both parties expressed willingness to review the mediation proposal, both showed somewhat reluctant expressions.

Floor leader Joo said, “The corporate tax cut is to attract foreign direct investment, not a tax cut for the wealthy,” and added, “If the government’s position is considered, this will create a virtuous cycle, making Korea a good country for business, attracting investment, and creating jobs. This is why we continue to demand it.” He also said, “The agencies established by presidential decree, such as the Ministry of the Interior and Safety’s Police Bureau and the Ministry of Justice’s Personnel Information Management Unit, have effect because the decree itself is enforced by an authorized institution,” and added, “It is illogical to say that the installed agencies receive personnel expenses but are not actually provided operating expenses.”

He urged, “I ask the Democratic Party to take a magnanimous view and make a concession so that the government can work,” and said, “The People Power Party will use the Speaker’s mediation proposal to negotiate again and reach an agreement.”

Floor leader Park said, “Since the mediation proposal was presented by the Speaker after deep consideration, the Democratic Party will also take it seriously and review it,” but added, “The key to processing the budget bill lies with the government and ruling party, so we will watch what position they take.”

However, he reiterated opposition to the corporate tax cut, saying, “The corporate tax cut during the Lee Myung-bak administration showed no trickle-down effect, and it was confirmed that there was no investment or employment.” Regarding agencies established by presidential decree, he said, “The National Assembly makes laws, so how long should the government be allowed to bypass the Assembly and do as it pleases?”

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