Second Disaster Relief Fund, 'Selective' Approach... Ruling Party and Government Discuss Excluding Some High-Income Groups

[Asia Economy Reporter Son Sun-hee] The ruling party and the government are in final negotiations over excluding the top 10-30% income earners from the recipients of the second disaster relief fund. The government’s position is that since a method has been devised for all citizens to benefit through the 'credit card cashback' system, the disaster relief fund should be distributed selectively. However, some factions within the ruling party still strongly advocate for a 'universal relief fund,' making the outcome of the discussions noteworthy.

According to the government and the Democratic Party of Korea on the 20th, as they prepare to draft the second supplementary budget bill this year, they are seriously considering excluding the top 30% high-income earners from the disaster relief fund recipients. The Ministry of Economy and Finance proposed a package that provides disaster relief funds to the 'bottom 70% income earners' along with credit card cashback. While the disaster relief fund can be used like cash, the credit card cashback is a 'conditional support fund' given to those who increase their spending compared to a certain period to stimulate consumption in the second half of the year.

The credit card cashback is a consumption incentive that returns 10% of the increase in card usage in the third quarter compared to the second quarter as card points. Approximately 1 trillion won in budget is expected to be allocated.

Since the top 30% income earners are relatively well-off, the support fund is provided through the cashback method on the premise that they will engage in additional consumption. However, considering their spending capacity, there are criticisms that the cashback may actually favor high-income earners. The bottom 70% income earners can receive both the relief fund and the cashback benefits.

Within the Democratic Party, some still insist on a 'universal' disaster relief fund, so final discussions are necessary. However, a slight shift in sentiment is felt after Party Leader Song Young-gil effectively formalized the credit card cashback as part of the supplementary budget 'three-package' during his negotiation group representative speech on the 17th.

Nevertheless, there remains a difference in opinion between the ruling party and the government regarding the proportion of recipients for the disaster relief fund. The Democratic Party insists on providing it to the 'bottom 90% income earners,' a broader range than the government’s proposal. There is also speculation that through party-government negotiations, the final decision may be to provide it to the bottom 80% income earners.