4th Supplementary Budget Support Funds to be Sequentially Distributed by Year-End... "They Said They Would Give It All Before Chuseok"

4th Supplementary Budget Projects to Be Executed Sequentially by Year-End
Some Support Criteria Controversial... Certain Industries Excluded and Discrimination Reduced

[Sejong=Asia Economy Reporter Kim Hyunjung] The government’s 7.8 trillion won 4th supplementary budget (supplementary budget) project, organized to respond to the novel coronavirus infection (COVID-19) crisis, is expected to be executed sequentially by the end of this year. There are disagreements between the ruling and opposition parties regarding whether to include communication expenses and the criteria for supporting small business owners, and public opinion is divided, so there is a possibility of additional difficulties during the National Assembly review process. Some express concerns that the government may lose both the accuracy and promptness of the projects by prioritizing political and administrative convenience.

According to the National Assembly Budget and Accounts Special Committee (Budget Committee) on the 16th, the ruling and opposition parties agreed yesterday to pass the 4th supplementary budget bill at the plenary session of the National Assembly on the 22nd. Earlier, on the morning of the 18th, the Budget Committee plans to hold a full meeting to explain and question the supplementary budget bill, and on the 21st, a subcommittee of the Budget Committee will be activated to review the supplementary budget. If the ruling and opposition parties reach an agreement in the Budget Committee, the supplementary budget bill will be finally approved at the plenary session on the afternoon of the 22nd, and various projects including support for small business owners will begin application and execution.

◆Starting with support for small business owners... Emergency livelihood funds, etc., until the end of the year= Once the 4th supplementary budget bill passes the National Assembly, the government is expected to first start the Small Business New Hope Fund payment project, which accounts for 40% of the budget. Using the National Tax Service and the National Health Insurance Corporation, if it is confirmed that a small business owner with annual sales under 400 million won (general business, 1 million won) or a small business owner in a specially affected industry suffering from gathering restrictions (1.5 to 2 million won) is eligible for support, the government will notify the candidate by text message, and upon application, payment will be made without separate screening. However, small business owners not classified as candidates will apply and receive payments after the online and offline support systems are established, so the process of verifying sales decline is likely to be delayed until after Chuseok.

Along with this, the special child care support, which pays 200,000 won per child to households with children in elementary school or younger (5.32 million people, 1.1 trillion won), is also expected to be executed within September according to the existing payment system. Communication expenses, assuming National Assembly approval, will start support in September, and actual benefits will be received in October when charges are billed.

For the emergency employment stabilization fund for special-type workers and freelancers (700,000 people, 600 billion won), those who have already received benefits can be paid after the supplementary budget passes, but new applicants will only receive payments in November. The youth special job-seeking support fund (200,000 people, 100 billion won) will send notification texts to eligible recipients starting on the 18th and will be distributed in two phases. The second phase will begin accepting applications on October 12 and payments will be made by the end of November. However, if the number of applicants exceeds 200,000, payments will be made in the order of ▲low-income vulnerable groups who have not received job promotion allowances ▲participants in last year’s job support program ▲those whose participation in this year’s job support program has ended or is ongoing, or new participants. Emergency livelihood support funds for crisis households (550,000 households, 880,000 people, 350 billion won) will accept online and on-site applications in October, with payments delayed until November to December.

Prime Minister Chung Sye-kyun is delivering the '2020 4th Supplementary Budget Address' at the National Assembly plenary session on the 14th. Photo by Dongju Yoon doso7@

◆Ongoing controversy... "No distinction based on damage scale"= After the government released detailed guidelines for each project yesterday, some have opposed the policy for not considering the scale of damage. Some workers in industries excluded from the New Hope Fund support project, which the government reiterated its exclusion policy on, are representative. Among the gathering ban industries set to receive 2 million won, entertainment bars and dance hall operators (such as colatecs) were excluded, which the government explains is a criterion consistently applied in small business policy funds-related projects. However, entertainment bars are not only recognized industries with standards or definitions specified in the Food Sanitation Act, but also businesses where taxes are imposed and paid. Apart from the 'emotional law' that strongly characterizes them as hedonistic, even within the government, there is no clear reason for their exclusion.

Because the standard is based on sales, businesses operating at a loss due to low profit margins have no way to receive support, and the policy to support only the 'largest representative store' for business owners operating multiple stores is also controversial.

For example, suppose business owner A operates two stores with sales of 400 million won and 300 million won respectively, and business owner B operates two stores with sales of 410 million won and 200 million won respectively. Business owner A would be included as a support target, while business owner B would be excluded. In reality, business owner A’s total sales are 90 million won higher, but the current support system does not reflect this.