hankyoreh

Democratic Party floor leader Park Hong-keun (left) and People Power Party floor leader Joo Ho-young exchange forms of agreement on the bill for next year’s budget after signing them on Dec. 22. (Kim Bong-gyu/The Hankyoreh)

South Korea’s ruling party and main opposition party reached an agreement on next year’s budget bill on Thursday.

In regard to the corporate tax, which had been the chief point of contention, the ruling People Power Party (PPP) and the opposition Democratic Party agreed to lower the rate by 1 point across all tax brackets. In addition, the budgets for the police bureau at the Ministry of Interior and Safety and the personnel information management team at the Ministry of Justice were both slashed in half.

The two sides are planning to pass the budget bill during a full session of the National Assembly on Friday — 21 days after the legal deadline for doing so (Dec. 2). That’s the latest a bill has been passed since the National Assembly Advancement Act took effect in 2014.

Joo Ho-young, floor leader for the PPP, and Park Hong-keun, floor leader for the Democratic Party, announced an agreement on the budget bill for next year and supplemental legislation on matters including the corporate tax in a press conference at the National Assembly on Thursday.

After much debate, the two sides agreed to lower the corporate tax rate by 1 point in all four of the current tax brackets.

As a result, the highest bracket of corporate tax, which is applied to corporations with a tax base above 300 billion won (US$234.7 million), will decrease from the current level of 25% to 24% next year. Furthermore, the tax rate will fall from 22% to 21% for a tax base of 20 billion won to 300 billion won, from 20% to 19% for a tax base of 200 million won to 20 billion won and from 10% to 9% for a tax base of 200 million won and below.

The government and the PPP had originally wanted the highest bracket for corporate tax to be lowered by 3 points but agreed to this compromise plan, proposed by National Assembly Speaker Kim Jin-pyo, after the Democratic Party refused to allow the tax rate to be lowered by more than 1 point.

The compromise reached on the police bureau at the Ministry of Interior and Safety and the personnel information management team at the Ministry of Justice, another divisive issue, was to slash their budgets in half from the 510 million won in the government’s plan. In exchange, the two parties agreed to come up with an alternative and add it to the next revision of the Government Organization Act to relieve the Democratic Party’s concerns that the government is abusing its authority by setting up the bureau and team through an enforcement degree rather than through legislation.

The two parties also overcame their differences by agreeing to allocate 352.5 billion won for issuing local currency in a program championed by Lee Jae-myung, head of the Democratic Party. That program had been entirely absent from the government’s original bill.

While the Democratic Party had strongly pushed for giving the program 705 billion won, this year’s level, they agreed with the PPP to set the budget at half that level.

The compromise bill maintains the government’s 1.4 trillion won allocation for public housing sold through a lottery system, which was one of President Yoon Suk-yeol’s campaign pledges, but also earmarks 660 billion won for public rental housing, as requested by the Democratic Party.

The National Assembly plans to pass the budget bill and supplementary legislation in a plenary session on the afternoon of Dec. 23.

In related news, the two major parties agreed to “cooperate to ensure there are no obstacles to conducting a full investigation, assigning responsibility, and taking steps to prevent a similar tragedy in accordance with the spirit of our agreement about a parliamentary probe into the Itaewon crowd crush.”

Another plenary session will be held on Wednesday, Dec. 28, to pass revisions to the Korea Electric Power Corporation Act, National Health Insurance Act, National Health Promotion Act and Korea Gas Corporation Act, as well as to deal with extended overtime for businesses with 30 or fewer employees under the Labor Standards Act and the safe fares system, which would otherwise expire this year, under the Trucking Transport Business Act.

By Sun Dam-eun, staff reporter; Shim Wu-sam, staff reporter

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