KIHASA in the News
100,000 Won per Person, Enough for Universal Disaster Relief Payments
- Media Date : 2021-06-17
- News Media : Maeil Business News Korea
- Hits 173
Translated from an article of Maeil Business News Korea, June 17, 2021
“The next round of universal economic relief payments should be thinly budgeted to be no more than 100,000 won per person. What the ruling party and the government should do now is to better select households whose income has dropped rather drastically due to the pandemic and compensate their income loss as fully as possible,” said Lee Tae Soo, president of KIHASA, on a meeting with Maeil Business News Korea on June 17, sharing his views on the desirable direction of the fifth round of emergency relief grants. Amid the voices in the ruling party that at least 300,000 won should be paid as emergency relief payments to everyone in the country, the head of a state-funded think tank in health and welfare policies indicated that he is in favor of ‘minimum’ universal payments.
President Lee helped sketch the current government’s welfare policies when on the National Planning Advisory Board, which was equivalent to the government transition committee, immediately after the inauguration of this administration. So he knows better than anyone else welfare policies designed before Covid-19 and their limitations.
He asserted that in order to minimize the size of the welfare blind spot in the post-Covid-19 era, it is important to put in place a real-time income tracking system and institute a social insurance scheme through which all people are enrolled on Korea's four major social insurances. He said, “The purpose of this round of disaster aid is to help the country move on from the pandemic crisis to the post-pandemic era. Universal relief payments the ruling party promotes should be limited to a sum of 100,000 won in local currency per person, which would amount to 5 trillion won in total budget, and an additional tax revenue of 15 trillion won should be budgeted for selective payments. But this time, unlike in the previous rounds of disaster aid, it is crucial to select accurately those households in need and maximize the utility.”
The key here, he said, is ‘tracking income in real-time.’ He added, “Fortunately, this key is already in the hands of the government. In order to usher in an era of employment insurance for all, the government last April revised the Enforcement Decree of the Income Tax Act, and accordingly, starting from this July, will collect on a monthly basis data of business and labor incomes of daily workers and other informal workers including freelancers.” He explained that the amount of income reduction can be estimated by comparing these data to the annual average income of 2019, and accordingly disaster relief payments can be made in a way that compensates this estimated income loss as fully as possible.
President Lee also suggested ‘Pay First, Take Back Later’ Scheme, saying, “If there occur overpayments in the process of rapid payments, we can take those overpayments back by means of the next year’s income tax return.”
He is saying about recognizing welfare benefits as income and taxing them. And the revision of the Enforcement Decree of the Income Tax Act is crucial for this to happen. In fact, the UK government gives out child benefits universally, but take the handouts back through tax for households whose income is above a threshold.