Ahn Dogeol: "Introduction of Win-Win Consumption Subsidy Needed in Supplementary Budget"

"Injecting 4 Trillion Won in Fiscal Resources to Generate 40 Trillion Won in Private Consumption"
Seeking a 'Two-Track' Approach with Regional Gift Certificates and Card Cashback

Ando Geol, Member of the National Assembly.

Democratic Party lawmaker Ahn Dogeol (Gwangju Dongnam-eul) argued on the 11th that “it is necessary to expand and introduce the Win-Win Consumption Support Fund system in this supplementary budget.”

In a press release that day, Ahn explained that by injecting 4 trillion won in fiscal resources?2 trillion won for the Win-Win Consumption Support Fund and 2 trillion won to support the issuance of regional gift certificates?it would be possible to induce 40 trillion won in private consumption.

The Win-Win Consumption Support Fund (credit card cashback) program was introduced in the second supplementary budget in September 2021 as a measure to revitalize depressed consumption during COVID-19 and to help overcome difficulties faced by the working class and local small businesses. At the time, the Moon Jae-in administration provided the Win-Win Consumption Support Fund, reimbursing 10% of the increase in consumption during the second half of the year in the form of credit card cashback to boost domestic demand.

The system reimburses 10% of the excess amount as cashback if the monthly card usage increases by more than 3% compared to the previous quarter. For example, if the average monthly spending in the second quarter is 1 million won and card usage reaches 1.53 million won, 10% of the 500,000 won exceeding the 3% threshold?i.e., 50,000 won?would be paid. The maximum was set at 100,000 won per person per month for two months.

During those two months, a total of 15.66 million people participated, and 8.54 million people (55%) received benefits, with total support funds reaching 801.9 billion won. Considering the 10% cashback on the excess over 3%, this induced more than 8 trillion won in private consumption. In fact, after the introduction of the Win-Win Consumption Support Fund, card usage increased by more than 13% year-on-year, and the private consumption growth rate in the fourth quarter of 2021 surged to 6.4%, compared to 3.7% in the third quarter. The system was found to have made a significant contribution to consumption recovery.

Ahn stated that for low- and middle-income groups with monthly card usage under 1 million won, the cashback rate should be increased to 15-20%, and the period should be extended from two months to three or four months.

He also proposed allocating 2 trillion won (with a 10% discount rate) to support the issuance of 20 trillion won in regional gift certificates, given their significant consumption-boosting effect. Regional gift certificates are limited in use to local small businesses, making them well-suited to stimulate neighborhood consumption and help small business owners recover sales. The credit card cashback is more suitable for the middle class, such as office workers, while regional gift certificates are preferred by the working class who frequent local businesses.

Ahn emphasized, “We need to devise an all-encompassing two-track approach to boost consumption?supporting the working class through regional currency discounts and the middle class through credit card cashback on increased spending. To maximize the economic effect of the supplementary budget and minimize the scale of fiscal input, the supplementary budget should be executed as quickly as possible.”