[General Election Pledge Analysis] ⑤ "Save Small Business Owners"... Effectiveness is 'Questionable'

Easing High Interest Burden, Enhancing Competitiveness in Unison
Ruling Party Proposes VAT Law Amendment…Opposition Calls for Expansion of Local Gift Certificates
Kyung Sil Ryeon "Unclear Funding Secured...Questions on Effectiveness"

Both the ruling and opposition parties are united in their call to "revive small business owners" ahead of the general election. The overall direction largely aligns on expanding policy funds for small business owners burdened by high interest rates, extending loan repayment periods, revitalizing local commercial districts, and supporting competitiveness enhancement.

Handonghun, Emergency Response Committee Chairman of the People Power Party, and Lee Jaemyung, Leader of the Democratic Party of Korea (right)

The People Power Party first proposed doubling the guarantee and policy fund targets for small business owners, aiming to supply a total of 28 trillion won. They also plan to double the repayment period for refinancing guarantees to ease the burden. Additionally, to support sales growth, they announced specific figures such as expanding the issuance of Onnuri gift certificates by 10 trillion won and introducing a 50% income deduction on credit card usage at small business stores.

In particular, they presented policies focusing on strengthening the self-sustainability of local commercial districts and small business owners. For traditional markets, they will start by improving parking environments and support capacity-building projects tailored to the characteristics of each local commercial district. Outstanding small business owners with high recognition and competitiveness in each region will be designated as "Baeknyeon Gage" (Century Store) or "Baeknyeon Sogongin" (Century Small Business Owner) and nurtured as representative companies of the region.

Amending the "Value-Added Tax Act" is also a key goal. On the 1st, Han Dong-hoon, the emergency response committee chairman, stated in Busan, "We will raise the application standard for simplified VAT taxpayers from an annual sales of 80 million won to 200 million won." Individual business owners are subject to different VAT standards depending on sales or industry, with simplified taxpayers paying a lower tax rate of 1.5?4.0% compared to general taxpayers at 10%.

The Democratic Party's pledges are generally in the same vein. They also plan to more than double policy funds to ease interest burdens and increase the issuance scale of local currency and Onnuri gift certificates. Furthermore, they intend to expand low-interest refinancing loans and low-interest policy fund loans, and introduce a specialized long-term and installment repayment loan program (10?20 years) for small business owners and self-employed individuals.

While the ruling party promised a 50% income deduction on credit card usage, the Democratic Party aims to expand the "scope" of credit card income deductions currently limited to traditional markets. They propose extending this to all small business stores where local currency or Onnuri gift certificates can be used.

The pledge to establish a "small business specialized bank" also draws attention. The plan is to create a specialized bank for small business owners and the self-employed to support low-credit, startup, and young small business owners. They also pledged to introduce the "Small Business Tomorrow Savings" program targeting micro small business owners. The government will provide matching support for a fixed monthly savings amount over three years, but the use of these assets will be restricted to purposes such as loan repayment.

Experts: "Structural difficulties remain unresolved"

On the afternoon of the 3rd, a comprehensive announcement press conference on the evaluation results of the general election pledges by experts was held at the Citizens' Coalition for Economic Justice (CCEJ) in Jongno-gu, Seoul. [Image source=Yonhap News]

However, it is uncertain how effective these pledges will be. There are criticisms that they may only provide short-term cash support or that the plans for securing funding are unclear. The Citizens' Coalition for Economic Justice (CCEJ) released expert evaluations of sector-specific pledges on the 3rd. The small business pledges were analyzed by Professor Na Jun-hee of the Department of Business Administration at Korea National University of Transportation and Professor Kim Jong-geun of the Department of Business Administration at Seoul Women's University.

CCEJ evaluated the People Power Party's pledges as "very realistic and expected to have practical effects in terms of rights compared to other parties." However, they pointed out that "there is no detailed explanation on how to secure funding for policy funds amounting to 28 trillion won, which requires considerable tax revenue."

Regarding the Democratic Party's pledges, they particularly noted the distinctive introduction of the "small business specialized bank" but criticized, "It is questionable whether it will practically reduce the burden on small business owners." CCEJ summarized, "The Democratic Party's pledges remain a department store-style approach to the hardships faced by small business owners and the self-employed in their business activities. Step-by-step policies that can resolve structural inequalities are necessary."