Government holds emergency economic meeting and confirms
The government has decided to use the 19 trillion won in excess tax revenue to support small businesses that have been hit by the COVID-19 quarantine measures and to repay government bonds. Of the excess tax revenue, 5.3 trillion won is invested in measures to support the livelihood of small business owners and the vulnerable in employment. On the 23rd, the government held a meeting of the Emergency Economy Central Countermeasures Headquarters at the government complex in Seoul and confirmed the ‘Measures to support the livelihood economy such as small business owners’.
The government came up with a plan to support the livelihood economy worth 12.7 trillion won by using 5.3 trillion won of the 19 trillion won in excess tax revenue generated by the faster-than-expected economic recovery and the already prepared budget. The government expects to generate 19 trillion won in excess tax revenue compared to the estimated revenue (314.3 trillion won) at the time of the second supplementary budget this year.
The government will provide 9.4 trillion won to businesses excluding loss compensation for existing small businesses. About 95% of the support amount, or 8.9 trillion won, is used for financial support. For approximately 100,000 businesses with restrictions on the use of personnel and facilities, such as accommodation, an ultra-low interest rate loan of 1.0% per annum is provided within the limit of 20 million won. 6.3 trillion won will be invested in expanding the existing emergency loan support requirements and targets.
50% of electricity bills and 30% of industrial accident insurance premiums are provided for 2 months to 140,000 small business owners and 800,000 companies subject to loss compensation among industries with limited personnel and facilities. The limit is up to 20,000 won per company. In order to recover sales, 50 billion won worth of rights to use cultural, sports and training facilities will also be distributed. Considering the fact that additional 1.4 trillion won is needed to compensate for the loss of small businesses, the scale of support for small businesses will increase to 10.8 trillion won. In addition, 1.9 trillion won will be invested in support for the vulnerable in employment, price stabilization, and support for care and quarantine.
The government will pay 7.6 trillion won, or 40%, of the 19 trillion won in excess tax revenue as subsidies from local governments, and spend 5.3 trillion won on this livelihood measure and 2.5 trillion won on repayment of government bonds. The remaining 3.6 trillion won will go to world surplus next year. Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki said, “We will focus our policy capabilities on supporting small businesses, stabilizing the livelihood and promoting domestic demand while paying attention to the quarantine situation.”