Next Year's Budget Proposal: Ruling Party Says "Austerity Unavoidable" vs Opposition Claims "Impact of Tax Cuts for Large Corporations and Ultra-Wealthy"

Government Submits Budget Proposal with Total Expenditure Around 677 Won
Heo Young: "Austerity Budget Lowers Potential Growth Rate"
Hwang Unha: "Budget Abandoning Livelihoods Pushed to the Brink"

At the '2025 Budget Proposal' forum held by the National Assembly Budget Office on the 5th, the ruling party, the People Power Party, argued that a sound fiscal stance must be maintained for fiscal sustainability. However, the Democratic Party and the Innovation Party strongly criticized it as a 'self-destructive austerity budget.'

Gu Ja-geun, the People Power Party's National Assembly Budget and Accounts Special Committee whip, evaluated at the forum that "despite difficult fiscal conditions such as the increase in national debt due to the previous government's expansionary fiscal policy and global economic uncertainties, a sound fiscal stance was established, and investments were made faithfully in livelihood and future preparedness."

On the morning of the 5th, participants including Park Jeong, Chairman of the National Assembly Budget and Accounts Special Committee, and Ji Dong-ha, Director of the National Assembly Budget Office, are taking a commemorative photo at the '2025 Budget Proposal Discussion' held at the National Assembly Members' Office Building.
[Image source=Yonhap News]

The total expenditure of the budget proposal submitted by the government to the National Assembly for next year is about 677 trillion won, an increase of 3.2% compared to the previous year. The welfare expenditure growth rate was 4.8%, achieving 1.5 times the total expenditure growth rate, which Gu explained as focusing as much as possible on supporting people's livelihoods.

Gu said, "Due to rapidly changing external conditions, economic slowdown factors, and stagnation in asset markets such as real estate, a large-scale tax revenue shortfall is also occurring," adding, "As announced by government ministries, the easiest and least worrisome way is to increase national debt." He continued, "Considering fiscal soundness, revenue conditions, and the economic situation, fiscal sustainability was likely taken as the most important criterion, while also supporting the livelihood economy and expanding budgets for the vulnerable. I believe the fiscal authorities have put a lot of thought and effort into finding the solution to this complex equation."

However, the opposition criticized that austerity was implemented due to tax revenue shortfalls caused by the 'tax cuts for the wealthy' policy.

Heo Young, the Democratic Party's Budget Committee whip, said on the same day, "Tax revenue decreased due to tax cuts for large corporations and ultra-wealthy individuals, and as a result, the reduced revenue forced fiscal tightening to maintain fiscal soundness," adding, "Austerity lowers potential growth rates, and under lowered growth rates, tax revenue shortfalls occur again, creating a vicious cycle."

He further pointed out, "During the 2008 financial crisis, Europe implemented such austerity and effectively collapsed," and criticized, "Next year's budget can only be evaluated as a self-destructive austerity budget for our country."

Hwang Un-ha, a member of the Innovation Party's Budget Special Committee, also harshly criticized, saying, "Economic vitality is declining, but there is no domestic demand, and although welfare for the vulnerable was emphasized, there are no vulnerable people," adding, "The budget for research, development, and births is underestimated, leaving no future, and it is a livelihood abandonment budget that pushes small business owners to the brink."

Hwang criticized, "The total expenditure growth rate of the budget proposal is 3.2%, which is below the next year's economic growth forecast of 4.5%," and said, "The government's minimization of spending is effectively a surrender of the government's role in revitalizing domestic demand."

Hwang saw the reason for this austerity budget as tax cuts. He criticized, "Tax reductions for conglomerates and large corporations have been greatly expanded, with the 2025 national tax reduction amount reaching a staggering 78 trillion won," adding, "For the first time in history, the statutory limit for tax reductions has been exceeded for three consecutive years. Some conglomerate companies have reached the point where they generate corporate tax revenue rather than corporate tax expenses."

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