‘No Other Choice But To Issue Govt. Bonds’
Rep. Na says a supplementary budget to boost the sagging economy
Rep. Na Seong-lin, the ruling Saenuri Party's acting top policymaker, talks with senior government and ruling party officials, including Deputy Prime Minister-Minister of Strategy and Finance Hyun Oh-seok on economic policies and pending issues.
Rep. Na Seong-lin, the ruling Saenuri Party’s acting top policymaker, said his party was discussing with the government a plan to introduce a supplementary budget to boost the sagging economy.
Na, the acting chairman of the Saenuri Party’s Policy Committee, said on the “News Show with Kim Hyun-jung” on CBS Radio on April 2, “The size (of an extra budget) has yet be determined, and it is under discussion. I can say there is no other option but to issue government bonds since it is not supposed to raise taxes in the middle of each fiscal year.”
Even if tax rates increase, it will have no great impact on bringing in additional tax revenues, Rep. Ha said. He went on to say that raising tax rates could further dampen the economy, so there is no choice but to resort to the issuance of government bonds for an extra government budget.
Rep. Na Seong-lin, the ruling Saenuri Party's acting top policymaker, talks with senior
government and ruling party officials, including Deputy Prime Minister-Minister of
Strategy and Finance Hyun Oh-seok on economic policies and pending issues.
Asked about the opposition side’s demand for raising more taxes from the rich, Rep. Na said it looked like a kind of political cliche since raising taxes means the exacerbating of the slumped economy: it would lead to a drop in investments and consumption, eliminating the effects of introducing an extra government budget.
He reiterated the fact that the reality is that raising taxes is out of the question because even through legislation for increasing the likes of income taxes could be approved, additional tax revenues wouldn’t be expected to trickle in until next March or even May.
Raising 10 trillion won through the issuance of government bonds, which is the equivalent of some 0.1 percent of GDP, is not big enough to deteriorate the fiscal position of the nation, Rep. Na said. If it affects fiscal soundness to some extent, he said the government needs to make public apologies about it, but the reality is that the national economy is moribund and in a serious situation.
As to the government’s package of real estate measures to turn around the sluggish housing market announced on April 1, Rep. Na said they can be seen from three perspectives °™ first, a drop in the supply side; secondly, acquisition tax and capital gains on property purchases will be exempted and financial support for home buyers will be provided on the demand side; and lastly, excessive regulations for curbing speculative fever in real estate will be eased.
They will include steps equivalent to the revoking of a ceiling on apartment distribution prices and the relaxation of permission on land transactions as well as allowing apartments more than 15 years old to be remodeled vertically within ensuring safety, he said.
Rep. Na is a second-term lawmaker with the 18th and 19th National Assemblies. He sits on the Special Committee on Budget & Accounts and the Strategy and Finance Committee.
Na served as an expert in tax and finance for the Lee Myung-bak government, and he is one of economic architects of President Park Geun-hye’s public pledges in the recent presidential election. Rep. Na also worked as a member of President Park’s policy consultation delegation with Washington, who met with officials from the Departments of State, Defense, and the Treasury.
In a recent lecture, Rep. Na made an objection to the introducing of the so-called Tobin tax, a taxation on foreign currency transactions. “It is possible for Korea to join several countries in introducing the Tobin tax, but it is out of the question for only the nation to do so since it would not only bring about a capital flow out of the country, but also shift heavy capital flow into futures markets, having its policy effect reduced by half,” Na said.
He said the United States was in the process of rebalancing with a power shift from Afghanistan and the Middle East to Asia. Na went on to say that the Korea-U.S. alliance was getting more important than ever due to North Korea’s provocations, such as the latest nuclear test, as well as the rapid growth of China.
Rep. Na held a meeting with World Bank President Jim Yong Kim in which the latter expressed the international financial institution’s willingness to finance a project of sharing young Koreans’ knowledge and experiences with other parts of the world.