(ATTN: UPDATES with more details throughout)
By Kim Soo-yeon
SEOUL, Jan. 14 (Yonhap) — South Korea plans to propose another extra budget of 14 trillion won (US$11.8 billion) in a bid to support small merchants as they are suffering COVID-19 caused losses amid extended tighter virus curbs, the country’s finance minister said Friday.
The country plans to create the extra budget given that last year’s excess tax revenue is estimated at 10 trillion won, according to Finance Minister Hong Nam-ki.
The planned budget will be first financed with debt sale, as excess tax revenue can be used only after the government settles last year’s state accounts in April.
The government plans to submit the extra budget bill to the National Assembly before the Lunar New Year holiday set for Jan. 31-Feb. 2.
“The government plans to draw up an extra budget to help small merchants and support antivirus efforts,” Hong told a press briefing.
South Korea plans to spend 10 trillion won to additionally provide 3 million won to merchants who have suffered falls in revenue.
In December, the government offered 1 million won each in a bid to ease their burdens of paying rent and other costs.
The country will also raise the budget set aside for the state compensation scheme to 5.1 trillion won from the current 3.2 trillion won.
Last year, the government launched a state scheme to compensate merchants for their losses caused by state orders to shut down business over COVID-19.
President Moon Jae-in ordered his officials Thursday to “swiftly” draw up measures to utilize excess tax revenue to support pandemic-hit merchants and the self-employed.
South Korea logged a larger-than-expected amount of excess tax revenue last year on the back of rises in asset prices and the economic recovery.
The country’s yearly excess tax revenue is estimated to reach at least 26.8 trillion won, larger than the finance ministry’s November forecast of 19 trillion won.
Hong previously opposed the creation of another extra budget, citing concerns about fiscal soundness.
But the ruling Democratic Party (DP) has pressed for the need to draw up a supplementary budget this year.
Ahead of the March presidential election, Lee Jae-myung, the presidential candidate of the DP, also called for an extra budget of at least 25 trillion won to support affected merchants.
South Korea drew up two supplementary budgets totaling some 50 trillion won last year to provide tailored support to small merchants and cash handouts to people in the bottom 88 percent income bracket.