[Interview] Kim Seonghwan, Democratic Party Policy Committee Chair, "We Will First Reduce the Burden of Oil Prices and Lunch Costs for Office Workers"

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Kim Seong-hwan, Policy Committee Chair of the Democratic Party of Korea. / Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Naju-seok] Kim Seong-hwan, the Policy Committee Chair of the Democratic Party of Korea, stated that in the July extraordinary session of the National Assembly, priority will be given to reviewing bills aimed at reducing the oil tax and easing the lunch expenses burden for office workers. However, he expressed strong concerns by labeling the government's ruling party's economic policies, such as lowering the corporate tax rate to 22%, as 'tax cuts for the rich.' Considerable friction is expected once the full-scale bill review begins following the formation of the parliamentary committees.

In an interview with Asia Economy on the 4th, Chair Kim said, "While we need to address the country's mid- to long-term tasks, given the so-called '3 highs' period of high inflation, high interest rates, and high exchange rates, we plan to prioritize discussions on the Transportation, Energy, and Environment Tax Act to lower oil prices and on raising the non-taxable limit for office workers' meal expenses to 200,000 won." Currently, both ruling and opposition parties have proposed amendments to the Energy and Environment Act to reduce the oil tax rate by up to 50% and to the Income Tax Act to expand the non-taxable meal expense limit.

Chair Kim further emphasized that all means will be employed to prevent inflation from being passed on to ordinary citizens. He said, "Although not yet finalized, we need to consider measures to slightly lower interest rates and to curb excessive profits of oil refiners to ease the oil price burden. We will mobilize all policy tools." He also announced plans to amend the punitive real estate tax system from the previous administration by lowering the cap on property tax increases during the regular session of the National Assembly.

Below is the Q&A.

- The National Assembly has finally convened after many twists and turns.

▲ Now, the first step of the second half of the National Assembly has been taken. In the first half, the intention was to responsibly proceed with the majority support of 180 seats, but it seemed to be perceived as unilateralism by the public. Compared to the misstep in the first half, the second half is fortunately better.

- Negotiations on the distribution of standing committees remain.

▲ It is still difficult to predict, but I think it may not take long. If personnel hearings are impossible, we will form special committees if necessary, but it is appropriate to complete the distribution of standing committees quickly so that the committees can begin their work.

- What is your view on the government's plan to lower corporate tax rates?

▲ The new government's economic policy direction is called MB administration season 2, but it resembles a typical neoliberal policy stance. This stance was deemed a failure after the 2008 global financial crisis. Moreover, implementing tax cuts for large corporations with the strongest competitiveness during a period of high inflation and high oil prices, when the ordinary economy is struggling, is ill-timed.

- The real estate issue has been a painful point for the Democratic Party through the presidential election and other events.

▲ The presidential election is originally a prospective vote about the future, but this time it was a retrospective vote. Voters cast retrospective votes because homeowners faced significant increases in property taxes, and those without homes felt sudden despair from becoming destitute. The cap on property tax increases should have been tightened, and it is regrettable that the comprehensive real estate holding tax burden on multiple homeowners was less than that on single homeowners, yet taxes were imposed on multiple homeowners. The current cap on property tax increases is 130% for homes valued over 600 million won; we plan to lower it to 110% and legislate to reduce the unfair tax burden on multiple homeowners by the regular session. However, the fundamental purpose of acquisition tax and comprehensive real estate holding tax on multiple homeowners will be maintained to curb excessive unearned income from real estate. It may be said that we are fixing the barn after losing the cow, but we need to fix the barn to bring the cows back.

Kim Seong-hwan, Policy Committee Chair of the Democratic Party of Korea./Photo by Yoon Dong-ju doso7@

- What are your policy directions regarding excessive profits of oil refiners and high interest rates?

▲ Policies are needed to ensure that truck drivers and users of trucks and passenger cars are not overly burdened. In the case of oil refiners, it seems reasonable to establish a fund corresponding to their excessive profits and use part of that fund for energy vouchers for energy-vulnerable groups. If that is not possible, the introduction of windfall taxes could be considered.

Self-employed people who endured by borrowing during the high-interest era have now overcome COVID-19 but are again crushed by interest burdens as rates rise, unable to repay their loans. Although it is their own judgment, those who borrowed excessively to buy homes, such as through 'Yeongkkeul' (borrowing to the maximum), are also in great difficulty. The government should play a role in minimizing their interest burden.

- What is your view on President Yoon Seok-yeol's energy policy?

▲ It is foolish to say that Hyundai Motor Company's internal combustion engine technology is the best and to go all-in on it. The world is rushing into the electric vehicle market. Similarly, most countries are reducing nuclear power plants. Moreover, we are one of the most densely nuclear-powered regions globally relative to population and land area. Adding more and aiming to become the strongest nuclear power is going against the times. Early in Lee Myung-bak's administration, green growth was promoted; if it had been pursued seriously then, we would already be the world's strongest in this field. The renewable energy industry has tremendous potential. Even if we concede 100 times that coal and fossil fuel energy should be reduced and replaced with renewable energy, partially supplemented by nuclear power, the current energy policy is worrisome.

- How do you evaluate President Yoon Seok-yeol's first multilateral diplomacy visit to the North Atlantic Treaty Organization (NATO)?

▲ The NATO meeting is not a place for economic sales. It is misleading to portray it as if economic sales were made by meeting European leaders. Korea has a geopolitical destiny; during the Korean War, the U.S. helped, and Korea must protect so-called liberal democracy while also maintaining friendly relations with neighbors like China and Russia. Including Hong Kong, economic exchanges with China account for 30%, and including Russia, nearly 40%. We need to pursue balanced diplomacy, but if we clearly adopt a pro-U.S. and anti-China stance, economic difficulties will arise. Nearly 10 million people are indirectly related to trade with China, so it is regrettable that the president does not deeply consider this.

Kim Seong-hwan, Policy Committee Chair of the Democratic Party of Korea. / Photo by Yoon Dong-ju doso7@

- There is a strong demand for change within the Democratic Party.

▲ Politics ultimately lives on the trust of the people, and our party's difficulties stem from various factors, but ultimately from losing the people's trust. In that regard, through the party convention, even if not all at once, we must regain the people's trust. Including real estate policies, the Democratic Party must represent the interests of the middle and working classes and implement policies suitable for future generations in the era of climate crisis, both mid- and long-term and short-term. Internally, we must be stricter to avoid criticisms of arrogance or double standards and approach the painful lives of the people with much more urgency.