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| Finance Minister Kim Dong-yeon, right, and floor leaders of the ruling and opposition parties hold hands after announcing their agreement on the government's budget bill for next year at the National Assembly, Monday. From left are main opposition Liberty Korea Party floor leader Chung Woo-taik, ruling Democratic Party of Korea floor leader Woo Won-shik, opposition People's Party floor leader Kim Dong-cheol and Kim. / Yonhap |
By Kim Hyo-jin
The rival political parties reached a tentative agreement over a budget bill for next year Monday, with some sticking points including the size of job creation in the public sector due to reservations from the main opposition Liberty Korea Party (LKP).
The revised budget bill will be put to a vote during a plenary session, Tuesday.
Floor leaders of the ruling and opposition parties announced their agreement on the 429 trillion won ($395 billion) budget for next year. This comes two days after they missed the Dec. 2 legal deadline for the government budget.
Amid growing concern about potential harm to the government's fiscal momentum, the party leaders met halfway on the budget.
But the LKP still expressed reservations on two provisions _ the increase in the number of public employees by 9,475 through 2018 alone, and the increase of the corporate tax rate to 25 percent for businesses earning over 300 billion won annually.
"We clearly stated our reservations on the two points in the agreement," LKP floor leader Chung Woo-taik told reporters.
With the deal, the ruling Democratic Party of Korea (DPK) agreed to reduce the government's original plan of creating 12,221 new positions to get an agreement with the main opposition Liberty Korea Party (LKP) and the minor opposition People's Party.
They claimed employment in the civil servant sector should not be increased by more than 7,000 to 9,000 jobs, expressing concerns about the fiscal burden of such jobs.
Under the tentative agreement, 2.97 trillion won ($2.75 billion) will be set aside for small businesses to cushion their labor costs increase from the latest minimum wage hike.
And the size of this fund will not be allowed to exceed amount in the 2018 budget plan from the year 2019, the floor leaders said.
The government and the ruling party originally sought to increase the corporate tax rate for businesses with taxable income of 200 billion won ($183.8 million) or more a year to 25 percent from the current 22 percent.
In a compromise the parties agreed to increase the tax rate only to businesses earning over 300 billion won annually.
They also saw eye-to-eye on extra childcare allowances, an increase in the state pension for senior citizens, and the expansion of health insurance coverage and inter-Korean cooperation funds.
Two-member families with a child up to five years old who are in the lowest 10 percent of income level will receive 100,000 won monthly beginning September next year.
The state pension for senior citizens will be increase to 250,000 won from September 2018, adding follow-up measures to counter elderly poverty will be devised.
However, the government's original scheme of allocating 120 billion won under the name of the inter-Korean cooperation fund was reduced to 40 billion won.
