[Q&A] "National Support Fund Paid to Bottom 88%? Considering Single and Dual-Income Households... Excluding Properties Over 1.5 Billion Won? Common Understanding"

"Even with a One-Third Cut in Cashback Budget, It Significantly Helps Boost Consumption"

Ando-geol, the 2nd Vice Minister of the Ministry of Economy and Finance, announcing the implementation plan for the three COVID-19 damage support packages on the morning of the 26th at the Government Sejong Complex. (Photo by Ministry of Economy and Finance)

[Sejong=Asia Economy Reporter Moon Chaeseok] Regarding the government's decision to set the eligibility criteria for the National Support Fund at the lower 88%, the government responded, "During discussions with the National Assembly, it was agreed that the income criteria needed to be reasonably readjusted considering the characteristics of single-person households and dual-income households."

Regarding the reason for setting the cutoff for high-asset individuals at a publicly announced property price of 1.5 billion KRW,

it was stated, "If one owns assets worth about 2 billion KRW in market value (approximately 2.1 billion KRW market value = 1.5 billion KRW publicly announced price), it can be considered a high-asset individual by common public perception."

On the reduction of the budget for the Win-Win Consumption Support Fund (credit card cashback) by about one-third during the National Assembly discussions, the government said, "Even at this scale, it will significantly help to stimulate consumption."

On the 26th, the government held the 3rd meeting of the 2nd supplementary budget inter-ministerial task force (TF) chaired by Ando Geol, Vice Minister of Strategy and Finance, at the Government Complex Sejong, and announced the 'COVID-19 Damage Support 3-Item Package Implementation Plan.'

Below is a Q&A summary based on the remarks made by Vice Minister Ando at the joint briefing held that day regarding the implementation plan for the 3-item package.

- Which industries were newly included as those with a 10-20% decrease in sales during the National Assembly discussions on the Small Business Hope Recovery Fund?

▲ (Cho Juhyun, Director of Small Business Policy at the Ministry of SMEs and Startups) Approximately 550,000 business operators and about 180 industries fall within this range. Representative industries include taxi transportation, wedding consultation and preparation services, eyeglass retail, and household laundry services.

- Why was the National Support Fund eligibility set at the lower 88% income bracket?

▲ It was not an arbitrary cutoff. The government's initial plan was to provide support to 80% of the population. However, during discussions with the National Assembly, it was agreed that the income criteria needed reasonable readjustment considering the characteristics of single-person and dual-income households. Reflecting those results, the criteria were ultimately set at about the 88% level.

- Why was the cutoff for high-asset individuals set at a publicly announced property price of 1.5 billion KRW?

▲ It is considered that owning assets worth about 2 billion KRW in market value qualifies as a high-asset individual by common public perception. Back-calculating this, the taxable standard came to 900 million KRW. The publicly announced market price and taxable standard are based on the 2020 publicly announced land prices.

- The credit card cashback budget was cut by about 400 billion KRW. There are concerns that the policy's effectiveness might be reduced. What is your response?

▲ Initially, the government allocated 1.1 trillion KRW, but it was reduced by about one-third during the National Assembly review. The original project period was set for three months but was shortened by one month to two months. (However) even at this scale, it is expected to significantly help stimulate consumption in the future. A large part of the goal is to revitalize local commercial districts. Due to the unexpected 4th wave of COVID-19, the economic damage to our small business owners has increased. Once the quarantine situation improves to some extent, we expect to use the cashback system very effectively to help small business owners recover their sales.

- You mentioned that both the card cashback implementation and disaster relief fund payments will consider the quarantine situation. Are there separate criteria such as social distancing levels for eligibility?

▲ For both, we hope that small business owners in local commercial districts can utilize them as much as possible. Since these involve face-to-face consumption, the quarantine situation must be seriously considered. Decisions will be made after comprehensive judgment, including social distancing levels. We will closely review the situation with the quarantine authorities and decide accordingly.

- Is the usage period for the National Support Fund three months? Can it be extended?

▲ The timing for usage support is still flexible depending on the quarantine situation. Currently, preparations are being made to allow usage in principle until the end of the year.