Kwon Chil-seung, chairman of the Democratic Party's policy committee, on the 3rd rejected the opposition People Power Party's claim that fiscal and monetary policies are working at cross purposes, saying the two should be seen as complementary. "At a time of rising interest rates, fiscal policy cushions the shock," he said. "I cannot agree with the argument that there is a mismatch."
He also dismissed media reports that the party is pushing to raise the basic deduction under the comprehensive real estate holding tax to 14 billion won for owners of a single home who do not live in it, and to delay the scrapping of the long-term holding deduction under the capital gains tax. "We have never conveyed any such content to the government," he said.
Speaking at a party policy coordination meeting at the National Assembly, Kwon said next year's budget concentrates investment on lifting the potential growth rate, which minimizes inflationary pressure. "At a time of rising interest rates, fiscal policy cushions the shock," he said.
"It matters not only how much we spend but where we spend it," he said. "It is also significant that the repayment of public funds injected during the International Monetary Fund bailout will be completed under next year's budget. The Lee Jae-myung government is wrapping up the IMF chapter that the Kim Dae-jung government graduated from." He added, "We will not waste a single penny of the budget funded by taxpayers."
Kwon described next year's budget, set at 821 trillion won, as "a vast investment for South Korea's great transformation, great leap and the hopes of its people." He said it would drive growth in an economy that is showing signs of recovery and spread the benefits of that growth by easing structural polarization. "A virtuous fiscal cycle has also been realized," he said. "The ratio of national debt to gross domestic product under next year's budget will be 48.3%, far below the 51.6% in this year's main budget. Economic growth is lifting tax revenue and improving fiscal soundness — that is a virtuous fiscal cycle."
Separately, Kwon said the party's task force on stabilizing the housing market had not sent the government any proposals for revising property taxes, contrary to some media reports. "Nothing at all was delivered," he said. "Please be careful with such reports." One outlet reported that the task force had conveyed to the government proposals to raise the comprehensive real estate holding tax basic deduction to 14 billion won for owners of a single home who do not live in it, and to delay the scrapping of the long-term holding deduction under the capital gains tax and its conversion into a long-term residence income deduction. The task force said in a notice to reporters that it had not conveyed to the government any plan to delay the removal of the holding deduction as part of property tax revisions.
