The Ministry of Strategy and Finance on Sunday suggested downsizing government expenditures in an effort to secure welfare resources for the incoming Park Geun-hye administration.
In its report to the presidential transition committee, the ministry offered to reassess several of the government’s ongoing tax-spending projects, sources said.
President-elect Park earlier pledged to secure 135 trillion won ($127 billion) to realize her welfare plans for the next five years by bringing the “underground economy” ― referring to covert or illicit business fields which have so far withheld taxes ― to light.
|Kim Yong-joon (second from right), chairman of the presidential transition team, and Saenuri Party Rep. Yoo Sung-kull (right), representative of its subpanel on economic issues, receive a policy briefing from the Ministry of Strategy and Finance at the team’s office in Samcheong-dong, downtown Seoul, on Sunday. (Park Hyun-koo/The Korea Herald)|
Of this amount, the finance ministry is to shoulder up to 81.5 trillion won, mainly by rearranging its annual expenditures.
“We urged (the Finance Ministry) to take up the initiative in taking measures to boost the middle class and to revive the economy for the working class,” said Rep. Yoo Sung-kull, head of the first subcommittee for economic issues.
To do this, the ministry chose to cut down on expenditures by merging overlapping businesses or by reinforcing the standards of financial evaluation for new projects.
A total of 608 governmental businesses will thus be subject to the ministry’s reassessment, according to officials.
The ministry’s plans also include the reduction of tax benefits such as the 15 percent deduction rate for credit card expenditures.
“By lowering the income tax deduction of credit cards and raising that of debit cards, we may lead people to a rational consumption pattern, as well as lower the nation’s household debt,” said a ministry official.
Social overhead capital projects such as the Lee Myung-bak government’s four-river restoration project will be kept to a minimum, officials also said.
The National Tax Service, too, is set to take detailed actions to reduce tax waste and to increase revenues.
The agency is to hold a national meeting of local tax commissioners on Monday to discuss the follow-up measures after its report to the transition team on Saturday.
Its agenda includes a reinforced set of regulations on the adulterated gasoline market, as well as on other large businesses which are prone to dodging taxes.
The Korea Customs Service, which is to make its briefing on Wednesday, will also map out its tax-saving strategy to prevent smuggling, the overseas flight of domestic properties, and illicit foreign exchange trades.
The presidential transition committee is to round up the government briefings on Thursday, after which it will buckle down to the blueprint of the incoming administration.
By Bae Hyun-jung (firstname.lastname@example.org