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Yoon’s pledge for seniors, soldiers, married couples to cost W68trBy Kim Yon-se
Published : March 21, 2022 - 16:18
Yoon pledged that he, if elected, would raise the basic pension (also known as age pension) payouts for the elderly and wage for draftees. He also promised to pay parents with newborns wages for a certain period.
Market insiders have raised concerns over how to fund Yoon‘s cash pledges, questioning efficacy of the president-elect’s suggestion. From the election, he said he would have the government raise the money by slashing other expenditures and spend increased tax revenue.
The Korea Manifesto Center estimated that it will cost 68.1 trillion won ($56.1 billion) to fund the cash payment to the three brackets over the coming five years.
About 35.4 trillion won in cash is needed for the hike in basic pension for seniors, aged 65 or over.
Yoon had pledged to raise the monthly basic pension by 100,000 won to 400,000 won, which will be paid to about 6.6 million seniors who are in the low or middle income bracket. They take up about 70 percent of the total seniors in the nation.
When a married couple simultaneously receive the pension, the collective payment to the couple will rise from the current 480,000 won to 640,000 won under rules of a 20-percent cut.
Additionally, the incoming administration should raise 25.5 trillion won to conduct monthly pay raise for draftees.
Yoon had pledged a drastic hike in the monthly wage for sergeants from the current 676,100 won to 2 million won. But he has yet to unveil methods to secure funds for the plan.
Further, it is expected that more funds are needed as the wage for occupation soldiers, including non-commissioned officers, could be raised in proportion to payout hikes for draftees.
As for the third pledge, the monthly wage of 1 million won will be paid to parents with newborns for 12 months, which requires state funds worth 7.2 trillion won.
Yoon’s position is to conduct a cut in government expenditure to other sectors by 10 percent (about 30 trillion won) per annum to raise the money for the three brackets. This means an expenditure save by 150 trillion won for five years.
He also plans to use the increase in tax revenue, under the assumption that the growth in tax revenue will post 4.5 percent per annum, which suggests an increase of 116 trillion won collectively by 2027.
A taxation professor in Seoul was quoted in local media saying, “It is hard to regard the natural increase in tax revenue according to bigger economic scale (as time goes on) as spare money.”
He predicted that government expenditure will have no choice but to be bigger in proportion to bigger economic scale, saying that “expenditure for seniors will become larger amid the aged society.”
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