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[Editorial] Populism again

Democratic Party pushes costly bill to return half of public transportation fees

By Korea Herald

Published : Sept. 27, 2022 - 05:30

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The main opposition Democratic Party of Korea is pushing a bill to return half of bus and subway fares that the people will pay for five months from Aug. 1 to Dec. 31 this year.

In a bid to ease the economic burden on the working class, the government and ruling People Power Party are considering increasing income tax deductions for public transportation expenses. Then the Democratic Party upped the ante by coming up with the cash handout bill

Proposed by Kim Sung-whan, chief policymaker of the Democratic Party, in July, the bill is among 22 legislation tasks that the party vowed last month to push strongly to help the people's livelihoods. The problem is, however, it will take as much as 4 trillion won ($2.8 billion) to refund half of bus and subway fares as the bill stipulates.

The National Assembly Budget Office estimated bus and subway fares that the people are expected to pay for the five months at 5.347 trillion won. So if half of it is refunded, the required budget will amount to 2.673 trillion.

Furthermore, if the government gives back half of public transportation fares to users, more people will likely use the bus and subway in order to receive the half-price benefit. Then the government’s financial burden will increase further. In this case, the budget office expects the government burden to expand to 4.6 trillion won. Setting up a nationwide refund system will require a huge amount of money as well.

Under the government and ruling party's plan to increase the existing income tax deduction for those public transportation fares paid via credit card, the required financial burden is estimated to amount to 344.5 billion won, according to the National Assembly Budget Office, and that figure is about one-seventh of the Democratic Party’s own plan.

And yet the party is pushing the bill regardless, arguing that about 2 trillion won will be enough for the refund.

Other lawmakers of the Democratic Party also proposed another bill related to public transportation that will increase the government's financial burden. The bill requires the central government to bear the entirety of subway and bus fares for seniors aged 65 and older so that they can use public transportation free of charge.

The existing law requires local governments to bear subway fees alone that are charged to senior citizens.

Though the related financial burden has not been estimated yet in terms of the current value, the National Assembly Budget Office once estimated the cost of a Democratic Party bill offering the same benefits, proposed in 2018, at 1.32 trillion won a year.

National debt that should be repaid by the government with funds from the sale of government bonds to taxpayers is expected to exceed 700 trillion won for the first time next year. This is much affected by the Democratic Party’s overuse of cash handout policies drawn up to win over voters. As a result, national debt to be repaid with taxpayer money surged by 415 trillion won for five years when it was the governing party.

If left unchecked, populist welfare policies drain state coffers and leave huge debt to future generations. If half of public transportation expenses are refunded, about 4 trillion won will likely be scattered to numerous people. It is unproductive and wasteful. If that amount of money is available, it should be used to reignite growth potential and tighten the social safety net.

The Democratic Party's leader Lee Jae-myung is well known for drastic populism. Shortly before stepping down as governor of Gyeonggi Province to run for the presidency, he took measures to make the privately run Ilsan Bridge toll-free, prompting the operator of the bridge to sue the province.

Handing out a tremendous amount of cash that could be more productively used will only weaken the government’s financial capacity. It is concerning that the majority Democratic Party under Lee is fanning populism again.