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Song Ho-jin　

The main opposition Democratic Party (DP) announced plans to push universal welfare services if elected to power. These services would include free school lunches, healthcare, and childcare, and would be provided without collecting new taxes or issuing government bonds. Instead, the DP plans to secure the necessary funds by undertaking three major reforms, namely budget cuts, reforms to the taxation system, and improvements to the welfare system.

During a press conference at the National Assembly on Sunday in conjunction with lawmakers in the Democratic Party’s Planning Team for Universal Welfare Finances, DP Chairman Sohn Hak-kyu said, “The universal welfare currently being pursued by the Democratic Party will guarantee all South Koreans a happy and humane life through the guarantee of a basic income and social welfare services such as healthcare, childcare, and education.”

“We intend to secure the finances for universal welfare without the issuance of government bonds or tax increases such as the creation of new taxes or sudden hikes in the tax rate,” Sohn added.

The planning team presented three methods for procuring welfare resources, namely financial reform, taxation reform, and welfare reform.

First, the team said, it would be possible to arrange 15 trillion Won ($13.4 billion) per year through financial reforms cutting five percent of unnecessary budget items such as the Lee Myung-bak administration’s Four Major Rivers Restoration Project and excessive publicity campaign expenses.

Also, it said, at least another 21.5 trillion Won per year could be arranged through taxation reforms.

This would include 15 trillion Won per year through rescinding tax cuts for the wealthy, including the lowering and abolition of the maximum income and corporate tax rate, as well as 6.5 trillion Won per year through reduction of tax exemptions.

In addition, the team said, welfare reforms such as the calculation of health insurance premiums based on total income rather than earned income would allow for another 4.2 trillion Won per year in financial resources.

The DP stated that some 16.4 trillion Won per year would be needed to institute its “3 plus 1 universal welfare” system. This includes providing free school lunches for elementary and middle school students at a cost of one trillion Won per year; free childcare, centered around full support for childcare facility usage for children under 5 years old, at a cost of 4.1 trillion Won per year; free healthcare, which would increase the percentage of health insurance guarantees for hospitalization expenses to 90 percent at a cost of 8.1 trillion Won per year; and halving tuition for university students, which would cost 3.2 trillion Won per year.

Planning team head Lee Yong-sup said that if the DP assumes power in next year’s presidential election, it will commit the 16.4 trillion Won in costs for the 3 plus 1 welfare plan by 2017 by annually increasing expenditures over the five years from 2013.

However, due to the lack of specific details in the plans announced on Sunday, the DP intends to commission the services of outside experts to examine plans for securing finances and polish the plans further, after which it will announce a final universal welfare plan in July of this year. It also plans to form a special universal welfare committee in the near future to develop a “3 plus 3 welfare plan” that would add employment and housing welfare to the 3+1 plan.

Many had predicted that the planning team would announce the results of its discussions at the press conference Sunday, but the appearance of Sohn shifted the focus to the content of the announcement. Sohn reportedly arrived first at the site, one hour and 15 minutes before the start of the press conference, in order to organize the content of the announcement.

Observers within the party said that his intent was to put to rest the debate within the DP over “tax hikes” by announcing the planning team’s findings himself, since the idea of realizing universal welfare services without new taxes accorded with his own conception.

In particular, some observers are questioning whether Sohn’s intent was not to use the plan to definitively distinguish himself from the advocates of tax hikes at a time when DP Supreme Council member Chung Dong-young is applying pressure by calling for the introduction of a wealth tax and a “tax hike alliance” with progressive parties.

However, some observers are objecting to Sohn’s decision to formally state the DP’s opposition to tax hikes through a talk with reporters the day before a general lawmakers’ meeting Monday in which the opinions of all representatives were to be sought.

“The people of South Korea have spoken, and they have said that welfare without taxes is hollow,” Chung said Sunday. “Of course, the content itself [the intent to not increase taxes] is a problem, but another problem is with the procedure of hurrying to announce it without gathering opinions in and around the party.”

With Chung calling for a vote among all party members, arguing that “the opinions of the chairman are not by definition the identity of the party,” observers are predicting that the tax hike debate will intensify the opposition between dueling courses within the DP leadership, as exemplified by the disagreement between Sohn and Chung.

In a statement, Grand National Party (GNP) spokeswoman Bae Eun-hee said, “The decision to commission a finance procurement plan from outside and announce the findings in July is the last word in irresponsibility, a declaration that they are only going to start thinking about it now.”

“The DP should cease its merry cries of ‘indiscriminate free welfare services,’” Bae said.

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