South Korean Politics and Elections

Assembly Passes 256.1 Tril. Won Budget for 2008

Korea Times, December 28, 2007

By Kim Sue-young
Staff Reporter

The National Assembly Friday approved a budget bill for next year scaled at 256.1 trillion won ($272 billion).

The figure represents a cut of 1.2 trillion won from the government's proposed amount of 257.3 trillion won, up 7.9 percent from this year.

Funds for education and welfare were reduced by 165 billion won and 227 billion won, respectively.

Under the inter-party compromise, expenditures in social overhead capital increased by 360 billion won.
The main opposition Grand National Party (GNP) initially called for a cut of more than 5 trillion won including a larger reduction in inter-Korean cooperation funds.

But after its candidate Lee Myung-bak won the presidential election on Dec. 19, the party changed its stance and agreed to cut government spending by a smaller margin.

Instead, the GNP demanded that an additional budget be set for investment in developing new energy and supporting small- and medium-sized companies at the last minute during an ad hoc Assembly committee session, which are mostly included in Lee's campaign pledges.

Due to opposition from the pro-government United New Democratic Party, the funds were set similar to this year's level, parliamentary sources said.

ksy@koreatimes.co.kr

Next year’s national budget reflects nature of Roh’s administration

2008 budget focuses on education, social security and welfare

The Hankyoreh, September 21, 2007

The term of President Roh Moo-hyun’s participatory government terminates at the end of this year, but the 2008 budget clearly reflects the nature of the administration. Roh’s will to emphasize the role of the nation and intensively support those areas needing assistance from the state, such as attempts to ease social polarization, has been reflected in next year’s budget. If the budget is approved by the National Assembly after it is submitted next month, the direction of these policies is not likely to undergo significant change - no matter which presidential candidate takes office next year.

The 2008 budget, including ordinary and special accounts as well as state funds, will reach 257.3 trillion won (US$276.7 billion), up 7.9 percent from this year’s 238.4 trillion won. Budget spending in general accounts will be about 182.8 trillion won, a 10.4-percent increase from this year, while expenditures on various state funds will rise 2.3 percent to 74.5 trillion won.

As this is the largest spending increase since 2002, some observers point out that this year’s budget has expanded. The Minister of Planning and Budget Chang Byoung-wan said, “Considering the fact that the current account growth estimate for next year will reach 7.3 percent, the budget is neutral to economic growth.”

Government spending next year will focus on research and development activities in order to strengthen growth potential and education, as well as on improving social security and welfare programs and promoting the nation’s balanced development.

The spending on social security, welfare and health will increase 10 percent to 6.75 billion won from this year, accounting for 26.2 percent of the budget. However, this amount is far less than that of other advanced nations. The ratio of the nation’s social welfare spending to the GDP is around 6 percent and the government plans to raise the figure to 21 percent, the level of advanced countries, by 2030.

The government allocated 8.1 trillion won of the budget, up 11.4 percent from this year, for construction of an administrative city and the second phase of the nation’s balanced regional development plan, under which government organizations and subsidiary agencies largely centered around metropolitan areas would be relocated to areas across the nation and the headquarters of leading businesses would be advised to move to peripheral areas.

Education spending will get a boost of 13.6 percent, up to 35.7 trillion won. Spending on research and development will increase 11.2 percent next year, surpassing 10 trillion won for the first time.

The government will be able to use 5.5 trillion won, out of an estimated 11 trillion won tax revenue surplus, to pay off the national debt. The ministry said the government will issue state bonds worth only 5.8 trillion won in 2008 and the ratio of national debt to the GDP will fall to 32.3 percent, down from this year’s estimate of 33.3 percent.

Due to the presidential election slated for the end of this year and general elections to be held in 2008, how the National Assembly will handle the 2008 budget is at the center of attention. Ordinarily, the government and the opposition lock horns over the size of a budget cut, but this year, it is highly possible that local lawmakers from both the ruling and opposition parties will request a budget increase.

“A budget expansion requires parliamentary approval, but the government won’t agree to unreasonable requests for expansion,” said Minister Chang.

The 2008 budget proposal will be finalized at a cabinet meeting on September 21 before it is submitted to the National Assembly next month.

Please direct questions or comments to [englishhani@hani.co.kr]

Plan to Recruit 373 More Officials Draws Criticism

Korea Times, September 4, 2007

By Kim Yon-se
Staff Reporter

The Cabinet Tuesday approved a bill to hire 373 more public servants at nine ministries this month, despite public criticism of the growing size of the government.

The number of hired government officials for the past nine months has reached 13,868, surpassing the initial plan of newly employing 12,000 this year.

Following the hiring of 3,225 civil servants in 2003, the number has continued to increase _ 9,700 in 2004, 12,590 in 2005 and 18,187 in 2006.

The 373 public servants include 131 for the Korea Coast Guard, 71 for the Military Manpower Administration, 33 for the Korea Customs Service and 23 for the Ministry of Culture and Tourism.

The increase has come less than two months since the Cabinet endorsed another bill to increase the payroll _ by 1,992 for the National Tax Service, 687 for police, 643 for the Ministry of Justice and 197 for the Ministry of Foreign Affairs and Trade.

Before President Roh Moo-hyun's term expires next February, the administration plans to recruit 500 more civil servants, according to informed government sources.

Cheong Wa Dae officials said 19 ministries and agencies need more employees to prepare measures for the ratification of the free trade agreement (FTA) between South Korea and the U.S. and to fill new positions for international cooperation.

Presidential spokesman Cheon Ho-seon said, ``the increase has been necessary in consideration of the situation among OECD member countries.''

``The government has advocated an `efficient government' and increased the payroll in both the welfare and social service sectors. Most of the positions to be recruited for are also for welfare projects,'' a ministry official said.

However, there is mounting criticism toward the recruiting of such large numbers with only six months to go before the end of Roh's tenure.

Prof. Lee Dal-gon of Seoul National University's Graduate School of Public Administration said it is hard to understand why the government enlarges the organization at the end of its tenure at a time when it should conclude policies it has promoted so far.

According to a long-term plan regarding government organization announced in April, the administration plans to hire more than 51,000 civil workers over the next five years _ even after Roh's retirement next February.

However, the plan may not materialize if the main opposition Grand National Party wins December's presidential election, as the party has pledged to cut public-sector payrolls.

Along with the increase in the payroll, labor costs for public servants also increased. The salaries paid to government officials totaled 16.8 trillion won in 2003. But they are expected to soar to 21.8 trillion won this year, sources said.

kys@koreatimes.co.kr

Park Pledges to Reduce Income Tax

Dong-A Ilbo, May 23, 2007

Presidential hopeful Park Geun-hye Tuesday announced a tax cut plan for salary workers and small and medium-sized companies.

At a press conference held in her campaign office in Yeouido, the former Grand National Party leader disclosed the tax cut policy plan. According to her plan, she will introduce an inflation-tied income tax, reduce vehicle fuel taxes by 10%, and lower the corporate tax rate.

If the new income tax plan is implemented, the income scale for different tax rates will be changed according to inflation. For example, people who earn 10 million won or less currently pay 8% of their income for tax. Those who earn between 10 million won and 40 million won pay 17% of tax. If inflation grows 10%, the income range for the 8% tax rate will be modified to 11 million won or less. Likewise, when prices go up by 10%, the income scale for the 17% tax rate will be changed to between 11 million won and 44 million won.

“Under the