This file photo, taken Nov. 3, 2021, shows merchants applying for state compensation over their losses caused by tough virus restrictions at a district office in Seoul. (Yonhap)
SEOUL, Nov. 23 (Korea Bizwire) — South Korea said Tuesday it plans to chart out around 12.7 trillion won (US$10.7 billion) worth of support measures for pandemic-hit small merchants and vulnerable people with excess tax revenue and the state budget.
The government unveiled a package of measures to support small merchants, including low interest rate loans and cuts in electricity bills. The steps also included ways to stabilize inflation and back quarantine efforts.
The country plans to spend a total of 10.8 trillion won to support merchants hit hard by the COVID-19 pandemic. To finance the measures, the government will use some 3.5 trillion won in excess tax revenue.
Of the amount, the government will use 9.4 trillion won to assist people working in sectors that have not been covered by a state compensation scheme.
South Korea has launched a scheme to compensate small merchants for their losses that have been incurred by tough virus restrictions. But businesses like travel agencies and accommodations did not receive such financial support.
The remaining 1.4 trillion won will be spent to finance the compensation program. The government needs 2.4 trillion won to cover merchants’ third-quarter losses, but it has secured only 1 trillion won from the related budget so far.
Stores are shut down in Myeongdong in downtown Seoul on Dec. 10, 2020. (Yonhap)
Under the support measures, the government will spend 1.4 trillion won to shore up unemployment benefits and job training, and 400 billion won to ease inflationary pressure. It also plans to use 100 billion won for antivirus efforts and child care services.
The government said it will tap part of the anticipated excess tax revenue of 19 trillion won to finance its support measures. Of the amount, some 11-12 trillion won will be available for fiscal spending.
South Korea earlier estimated the tax revenue surplus will likely amount to 31.5 trillion won for this year.
With the excess tax revenue, the country drew up an extra budget in July to help finance emergency relief funds for people in the bottom 88 percent income bracket.
But further excess tax revenue of 19 trillion won is anticipated amid the accelerating economic recovery and a boom in the asset markets.
Meanwhile, the government plans to extend a cut in the consumption tax on passenger cars by another six months in a bid to boost domestic demand.
A 30 percent cut in the consumption tax on the purchase of passenger cars is supposed to expire at the end of this year, but the government said it will extend the measure until June next year.
In July 2018, the government slashed the auto consumption tax to 3.5 percent from 5 percent and has continued to extend it in an effort to increase domestic demand.
(Yonhap)
