Children blow bubbles at a day care center in Gwangju, March 13. Yonhap

The government should increase its cash assistance rather than reduce taxes to effectively support couples to have more children and help fight the country's demographic crisis, a new report said Wednesday.

The National Assembly Budget Office report said that although the government focuses on reducing taxes for couples rearing children, such policy hardly helps boost birthrates.

It noted a 1.5 million won ($1,030) reduction in income tax per child and a 15 percent deduction on education expenses per child, among other measures.

Despite these measures, the tax paid by couples with children is only 1.7 percent point lower than childless couples, the report said.

The 1.7 percentage point difference is lower than the OECD average of 5 percent point, according to the report.

"The finding shows why the government spends so much money on birth policy and yet the birthrate remains low," it said.

The country's birthrate was 0.75 in 2024, marking the first increase in nine years but still the lowest in the world.

The report suggested increasing cash incentives. "Such measure can have substantial impact on families who grapple with high cost of living in raising children," it said.

It referred to monthly cash assistance of 1 million won for families with a child aged younger than 1 and 500,000 won for a child aged between 1 and 2.

"Cash can be an effective means of support as the parents can spend money directly on what they need," it said.

The report said Korea ranked the 32nd among the 38 OECD members, concerning average government expenses for family support.