The search for solutions to South Korea’s critically low birthrate is increasingly highlighting the pivotal role of fiscal authorities. (Image courtesy of Yonhap)
SEOUL, Feb. 26 (Korea Bizwire) – The search for solutions to South Korea’s critically low birthrate is increasingly highlighting the pivotal role of fiscal authorities.
While the Presidential Committee on Ageing Society and Population Policy serves as the interdepartmental control tower and the Ministry of Health and Welfare is the primary agency, the essence of many low birthrate strategies lies in fiscal policy, necessitating robust budgetary and tax support.
There’s a growing movement to upgrade the Presidential Committee on Ageing Society and Population Policy to a director-level organization, which is expected to involve the budget and tax divisions of the Ministry of Economy and Finance (MOEF).
According to insiders, Joo Hyung-hwan, the vice chair of the committee and a former MOEF official, has emphasized the need for a “transfusion” of MOEF personnel.
This move is part of a broader trend towards elevating the status of the vice chair from a ministerial level, part-time position to a deputy prime minister level, full-time role.
In a statement, a senior MOEF official commented, “The low birthrate issue goes beyond who leads and who collaborates. It’s a situation where all related departments must work together.”
Another key figure emphasized the need to look beyond specific budget projects and examine the overall structure of low birthrate measures.
The consensus is that even though social and cultural structures like real estate issues, metropolitan overpopulation, and excessive private education are intertwined with low birthrates, the MOEF is determined to explore all available options within its purview.
Currently, the National Tax Service (NTS) is in the spotlight, especially with significant time remaining until the announcement of the tax reform bill, usually in July.
The taxation of a 100 million won fertility incentive by Booyoung, a company, has sparked debate, prompting the NTS to soon release general tax guidelines that could apply to other companies while maintaining the positive effects initiated by Booyoung.
Separate from the “Booyoung issue,” tax benefits supporting childbirth and childcare are expected to be strengthened.
Proposals include raising the non-taxable limit for childbirth and childcare allowances provided by companies and applying these allowances more broadly on an annual basis. Expanding individual income deductions and child tax credits is also under consideration.
In the long term, there’s a call for establishing a dedicated funding source for population policies.
While creating a separate account may not immediately boost birthrates, it could provide a clearer overview of low birthrate-related budgets, addressing inefficiencies and redundancies in the current system that aggregates budgets from various departments.
In the economic policy sector, efforts are focused on devising measures to support women’s economic activities, centered around the Future Strategy Bureau. With the increasing rate of women’s economic participation, the key is to facilitate work-family balance.
M. H. Lee (mhlee@koreabizwire.com)
