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The government has slashed the nation's economic growth outlook for this year to 2.9 percent to prevent the economy from deteriorating further and income polarization from widening. The government has also unveiled new economic policies aimed at helping low-income households and creating jobs.
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The government has decided to raise the earned income tax credit and expand the number of workers eligible for tax breaks. Age limit for workers' tax breaks will be lifted, while the criteria regarding income and assets will be eased. Dual-income households with annual income of less than 30 million won and assets under 200 million won will be eligible to apply for the earned income tax credit. Under the new regulation, the number of households that can benefit from workers' tax breaks will double from 1.6 million to some 3.4 million. The maximum per-household amount of tax breaks will be raised to three million won, with the total amount tripling to 3.8 trillion won.
[Soundbite] Kim Dong-yeon(Minister of Finance) : "We need more proactive measures to narrow the income gap and reduce income polarization to ensure economic mobility."
A special payment system will be introduced to exempt small entrepreneurs from credit card payment processing fees in a bid to help them survive in the era of higher minimum wages. The government will also set a three-trillion-won budget next year to create jobs. More jobs will be introduced for seniors, while the basic pension will be raised to 250,000 won this September and to 300,000 won next year. To boost domestic demand, the government will immediately cut the special consumption tax on automobiles. It will remain in effect until the end of this year. This means that domestically produced medium-sized cars will cost around 600,000 won less. Consumers will be able to purchase cars at cheaper prices by receiving discounts directly from automakers as well.
