[Yeouido Interview] "Yoon, Solve the National Fiscal Cartel First"... Jang Hye-young Targets Ministry of Economy and Finance and Both Major Parties

Due to Secret Budget and Tax Law Deliberations
Justice Party Opens Doors to Transform into a 'Problem-Solving Party'

"If President Yoon Suk-yeol truly wants to solve the cartel problem, he must look at the fiscal cartel issue between the Ministry of Economy and Finance and the (major) two parties."

Jang Hye-young, a Justice Party lawmaker, recently stated in an interview with Asia Economy that "there is a cartel even in national fiscal management," criticizing that "the National Assembly, which should pressure the Ministry of Economy and Finance (government), accepts the government's proposals during the budget and settlement periods, and within that, the two major parties secure their own interests." She pointed out that the People Power Party and the Democratic Party process the budget in a secretive 'small subcommittee' that has no basis in the National Assembly Act.

As a member of the Strategy and Finance Committee, Jang has been responsible for tax law reviews as a member of the Tax Subcommittee last year and this year. This year, she plans to participate in the review of last year's settlement and next year's budget as a member of the Special Budget and Accounts Committee. Jang sharply criticized that the National Assembly has neglected its responsibility for the repeated miscalculations of tax revenue estimates over several years. She said, "The two major parties have not properly criticized this issue, so there is little incentive to correct it."

Regarding the supplementary budget (Chugyeong) that the Justice Party is promoting with the Democratic Party, she expressed a negative stance. Jang said, "I agree with the Democratic Party's claim that a supplementary budget is necessary," but criticized that the supplementary budget proposed by the Democratic Party lacks alternatives. Since this year’s tax revenue shortfall reaches 40 trillion won and the Democratic Party is demanding a supplementary budget of about 30 trillion won, issuing 70 trillion won in government bonds is inevitable. If a large amount of stable government bonds is released into the market, the bond market could experience a sudden shock. She added, "Discussions on withdrawing tax cuts or raising taxes must precede this." She emphasized that reflection on the agreement between the People Power Party and the Democratic Party to lower corporate taxes during last year’s budget review process is necessary.

Regarding the Justice Party’s crisis, including about 60 party officials leaving the party recently, she harshly commented, "At the very least, they should have left after the party leader’s hunger strike protesting the discharge of contaminated water from Fukushima, Japan, ended." About the Justice Party’s future, she suggested, "We must go beyond merging with parties we have formed electoral alliances with," and "If someone can join the goals we want to create, they must be prepared to go together, no matter who they are."

Political Desk Interview_Jang Hye-young, Justice Party Member. Photo by Kim Hyun-min kimhyun81@

The following is a Q&A

-The Democratic Party has expressed intentions for a supplementary budget

=I think it is common sense to propose a supplementary budget when the economy is not doing well. The problem is that in a situation where a large-scale tax revenue shortfall occurs, talking about issuing government bonds without discussing withdrawing tax cuts or raising taxes is irresponsible. Wasn't it the Democratic Party that agreed with the ruling party on the tax revenue decrease?

-Didn't the Justice Party say it would cooperate with the Democratic Party on the supplementary budget?

=I agree with the claim that a supplementary budget is necessary. However, the current tax revenue shortfall is 40 trillion won, and the Democratic Party is talking about a supplementary budget of about 30 trillion won. That means 70 trillion won in government bonds must be issued, but if government bonds come out while issues like Korea Electric Power Corporation bonds remain unresolved, the market will react. Before deciding the scale of the supplementary budget, the Democratic Party must present responsible alternatives. Only then can we talk about the supplementary budget.

-How do you evaluate the current government's fiscal policy?

=The fiscal policy of the Yoon Suk-yeol administration can be summarized as tax cuts on one side and austerity on the other. This is evident from last year’s tax law review and the fiscal rules the ruling party is promoting. However, in difficult economic times, vulnerable groups must be protected through social safety nets. Also, proactive investment is needed during social and cultural changes represented by the climate crisis. It is a time when fiscal policy must play an active role. The tax cut policy does not fit these times. Moreover, our tax and fiscal politics are proceeding in a very irresponsible manner.

-Please explain more specifically

=Having worked in the Tax Subcommittee, I see that budget management is lax due to the secrecy and closed-door practices between the Ministry of Economy and Finance and the two major parties. The tax revenue error rate (difference between budgeted and actual revenue) was 21.7% in 2021 and 15.6% in 2022, and it is the same this year. The difference is that previously more revenue was collected than expected, but this time less is collected. So far, over 34 trillion won has been short. Despite the budget being off for three consecutive years, no re-estimation is done. The Board of Audit and Inspection has audited this issue and prepared countermeasures, but they are not followed. This is possible because the National Assembly does not properly check and balance. The Ministry and the two parties review and process the budget behind closed doors.

-After last year’s budget review, tax laws changed, but the budget was processed without adjusting tax revenue forecasts. Do you think this is a reason for the tax revenue error?

=Looking at last year’s budget amendments, the national tax revenue figures in the income section did not change. After the budget review, the Ministry of Economy and Finance explained that the tax revenue change due to the amendment was only about 80 billion won. Considering this year’s tax revenue shortfall, there is suspicion that the Ministry knew tax revenue would decrease due to the downward revision of economic growth but did not conduct a re-estimation. There is suspicion that because it is difficult to raise taxes in a worsening economic outlook, they avoided re-estimation.

-You have served in the legislature for three years. What do you see as the biggest problem?

=Democracy is essentially about creating common ground and understanding through discussion before making decisions by majority vote. However, our National Assembly has made skipping this entire process the new normal. I believe this series of processes is damaging democracy itself.

Political Desk Interview_Jang Hye-young, Justice Party Member. Photo by Hyunmin Kim kimhyun81@

-What should change in the year-end budget and tax law review?

=Transparency is the core of fiscal democracy. Even if a law is strange, if we know why it was processed that way, we can review it. But last year, the budget and tax laws were decided through meetings between floor leaders without any minutes. This goes beyond the public’s right to know and reduces budget legality to a mere formality. Political reform is needed for this reason.

-The Justice Party held a national committee to confirm the path of reestablishment, but party officials continue to leave. How do you evaluate the party’s situation?

=Those who left made political choices, so there is nothing to say about that. However, I think they should have waited until Justice Party leader Lee Jeong-mi’s hunger strike ended before leaving. Some say the Justice Party’s role is over, while others say we should try harder. I value the latter more. As part of that, I want to do my best.

-Where should the Justice Party go?

=Some think about merging with parties they have formed electoral alliances with or creating a new party, but I believe we must open much wider. It is no longer about who is bad or vetoing others to become a good party. Ultimately, the real ability lies in persuading what can be changed. To do this, a party that solves problems must be created. Then priorities will emerge, and concrete solutions must be presented. However, it is important not to approach this with the mindset that we are absolutely right and others are all wrong.

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