Rival political parties on Friday agreed to pass a landmark budget deal next week, after lawmakers ironed out disagreements over a series of tax hikes and an education subsidy.
The agreement is expected to allow the governing Saenuri Party and the main opposition New Politics Alliance for Democracy to pass the 2015 government budget bill at next Tuesday’s plenary session.
Friday’s deal sets a historical precedent, experts said, that will likely compel future lawmakers to live up to a rarely respected constitutional deadline.
The Constitution mandates lawmakers to finish the budget review by Dec. 2. But the date has often been ignored due to partisan bickering over contentious portions of next year’s budget. Legislators have met the deadline only once in the past 15 years.
In 2012, lawmakers wrote in amendments to parliamentary laws that forced the budget bill to be forwarded to a plenary session on Nov. 30, with or without a bipartisan compromise. The new law came into force for the first time this year.
And with lawmakers signing off on a deal before Nov. 30, Friday’s accord sets a historical first that will be difficult to sidestep, said Chung Jin-min, professor of politics at Myongji University.
“Lawmakers will likely find it hard to delay the budget, as they have in the past,” Chung said.
Yun Seong-yi, a professor of political science at Kyung Hee University, agreed: “The deal has historical significance because the National Assembly has oftentimes been criticized as a lawmaking body that does not respect the Constitution.”
Friday’s talks concluded weeks of political tug-of-war over proposals to raise the tobacco tax and corporate taxes, and how to fund an education subsidy called the Nuri Curriculum, a government-sponsored free childcare program for children aged 3 to 5.
Tobacco taxes appears to have gone the governing party’s way, while corporate rates and the Nuri Curriculum went to the opposition, according to the agreement.
The governing party supported raising the tobacco tax, saying the increase would convince thousands to quit. The main opposition opposed the regressive tax hike saying low-income earners would be hurt the most.
Friday’s accord set the price rise at 2,000 won ($1.80) per pack of cigarettes, a figure that has been supported by the government and the ruling party.
The main opposition in turn demanded higher levies in corporate rates, a move that the Saenuri Party has opposed, citing the need to boost the economy by enticing large companies to spend more.
Under Friday’s deal, governing party lawmakers agreed to take away some of the corporate tax cuts, amounting to up to 5 billion won.
The agreement also allowed a major portion of the Nuri Curriculum to be funded by the central government.
A war of words between the country’s main parties over how to raise funds for the education bill had been prolonging this year’s budget review, with the central government’s share in financing the education subsidy a thorny issue.
The agreement on Friday laid out a plan for the central government to pay the increases included in the 2015 budget, without noting a specific amount.
By Jeong Hunny (hj257@heraldcorp.com)
