Koo Yooncheol Agrees with President Lee's Pledge to Separate Budget Function from Economy Ministry

"Active Consideration of Introducing a Domestic Production Promotion Tax System"

Yonhap News

On July 17, nominee for Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance Koo Yooncheol stated at the Ministry of Economy and Finance that he "agrees" with the government reorganization plan to separate the budget formulation function.

At the confirmation hearing held at the National Assembly that day, Koo responded to the suggestion that national resources should be allocated under the leadership of the President and that each ministry should autonomously formulate its project budgets by saying, "I share the same view."

The reorganization of the Ministry of Economy and Finance is one of President Lee Jaemyung's key campaign pledges. The National Planning Committee reported a draft of the government reorganization plan earlier this month. As pledged by President Lee, the report includes the separation of the budget formulation function from the Ministry of Economy and Finance and its transfer to the Office of the Prime Minister.

In response to a question from Cha Kyugeun, a lawmaker from the Korea Innovation Party, regarding the introduction of separate taxation on dividend income, Koo said, "It is one way to address the Korea Discount in the stock market," adding, "If appointed, I will review the potential changes that the introduction could bring."

In a written response submitted earlier, Koo also stated, "To advance the capital market and support asset formation for the public, tax incentives that can encourage companies to increase dividends are necessary."

Regarding criticism that separate taxation on dividend income could amount to a "tax cut for the wealthy" and become an act of self-sabotage that would tie the hands of the Lee Jaemyung administration, Koo said, "I will comprehensively review both the issues raised in the past and those pointed out by the committee member."

Koo also said he would actively consider introducing a domestic production promotion tax system. In response to a question from Jin Sungjun, a lawmaker from the Democratic Party of Korea, who said that such a system should be introduced as in Japan, Koo stated, "Since the hollowing out of domestic manufacturing is occurring, I will actively consider it."

Koo added, "I will study whether a virtuous cycle can be created in which production and consumption take place domestically, thereby generating jobs within the country."

Regarding the question of whether the effectiveness of Korea's numerous R&D tax credits and investment tax credits is questionable, Koo said, "Depending on the case, we should also consider bold refunds for local companies."

The domestic production promotion tax system, also known as the "Korean IRA," is a campaign pledge of President Lee. Under this system, if products finally manufactured in Korea are sold to domestic consumers, corporate tax credits are provided in proportion to domestic production and sales volumes.

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