Since the beginning of the year, the coronavirus disease (COVID-19) has threatened the lives of people. As the situation has been extended, some people are facing a more fatal threat than others. With a higher level of social distancing taking place, stores have closed down or have been restricted to open within limited hours, and individual proprietors are faced with rapidly decreasing income and the burden of regular business costs. Accordingly, the government contrived a supplementary budget to help people who are facing economic peril. However, the adequacy of the budget and the distribution of the resources have been controversial, concerning how and whom the budget covers.

On September 22, the fourth supplementary budget proposal was confirmed at the National Assembly. In the scale of 7.8 trillion won, the budget includes a telecommunication subsidy to people between the ages of 16 and 34 or over 65, and funds small enterprises in the range of one to two million won, depending on the type of business. Furthermore, the fund guarantees free vaccination to the socially vulnerable such as the disabled and basic pensioners.

The Various Sides of the Supplementary Budget

Funding people in any form produces positive effects not only financially but also psychologically. According to a survey conducted by Professor Choi Young Jun (Department of Public Administration, Yonsei University), nearly 80 percent of people expressed satisfaction with the first emergency financial assistance, supporting the universal funding and stating that it contributed to their emotional stability. As there was a wide range of people who were negatively affected by COVID-19, such as those who experienced difficulties in income and interpersonal relationships, the government’s universal aid was helpful.

The supplementary budget, in spite of its good intention, however, has been confronted with criticism for several reasons. The first point is that the subsidy itself cannot be the fundamental solution to the situation. The most critical burden small corporations face is the rental fee that remains static while sales have dramatically gone down. Thus, the one-off financing may not be the best long-term way to support corporations.

“The support for businesses that were forced to close down or be restrained due to the restrictions on public gatherings should be increased,” stated Professor Yang Jae-jin (Department of Public Administration, Yonsei University). He highlighted that the government should provide compensation for the considerable loss of profit as it did in the case of the livestock industry, where the government subsidized 80 to 90 percent of the price when the industry had to kill livestock in order to prevent the spread of infectious diseases among domestic animals.

On top of that, the increasing usage of electronic devices owing to the untact trend raised the idea to finance telecommunication coverage for citizens. However, according to Park Dae-chul, a member of the National Assembly, about 96 percent of the telecom firms’ consumers use a flat sum system, which means they are paying a flat rate regardless of the amount of usage. Funds for the communication charge thus can be criticized as an unnecessary expense for the government. Furthermore, covering the telecommunication charge cannot contribute to reviving the economy because it hardly triggers the multiplier effect — an economic term for the ripple effect — and the subsidy just becomes profit for telecom companies.

Under the current complex circumstances, how can we reach a consensus about the standard of the necessary? In addition, do we have an administrative system that can decide where to spend the relief funds rightfully and fairly? Indeed, controversies are surrounding the standards for determining the eligible people for the funds and their adequate amount, which are challenging issues as they are associated with the issue of equality.

Ways to Cope with the Circumstance Wisely

For independent proprietors, providing opportunities to discuss the rental fee with the lessor could be an effective method to alleviate their burden. In fact, the movement to revise the Commercial Building Lease Protection Act has been introduced in the National Assembly. The revision enables the lessee to request a reduction of rental fees due to the difficult economic situation induced by COVID-19. In addition, the revision embodies the newly organized clause which states that overdue payment within six months cannot be a factor in canceling the contract. The revision of the act is expected to contribute to protecting small businesses from bankruptcy.

“A system that can aid people in financially difficult situations is needed, rather than policies that ensure basic income and provide an equal amount of payment for everyone. Social resources are limited, and we have to use them wisely to establish a social security net which helps social members overcome any adversities, rather than promoting a basic income system that can only guarantee 150 thousand won per person,” stated Professor Yang. In other words, a social security net could be an effective way to distribute limited resources, as everyone would be able to benefit when they encounter difficult situations, ensuring minimal income.

Advance payment and after-taxation are other measures commonly proposed to complement such a policy. The idea is to supply everyone a considerable amount of funds and return the money in the form of tax according to the amount of income the year-end settlement indicates. This idea can resolve the unnecessary social controversy about the necessary support, as it can increase the efficacy of tax, enhance the social bond, and be dispensed at a fast rate.

The cost of government subsidies arisen due to COVID-19 is a common quota the society needs to pay, so the government is using tax to share the expense and finance the overburdened citizens. In order to distribute the limited resources optimally by comparing the benefits and costs, the government should open its ears to the experts in the field of economy and politics to make the best decision. Controversies about the fourth supplementary budget are being continued, and thus the budget should be further studied and adequately evaluated from various angles.