Ruling party chief warns against populist welfare policies

The chief of the ruling Saenuri Party warned Tuesday against populist welfare policies, saying an expansion in welfare must be accompanied by tax hikes.

Kim Moo-sung made the remarks in a speech marking the start of this month's extra parliamentary session as critics have accused the government of deceiving the public with policies designed to collect more taxes.

"Welfare without tax hikes is impossible and it isn't right for a politician to deceive the public with such words," he said in his address to the National Assembly.

President Park Geun-hye promised during her 2012 election campaign to expand welfare programs without increasing tax rates. Early in her term, she vowed to regularize the underground economy, curtail unnecessary projects and plug tax loopholes in order to fund the programs.

In recent months, however, the government has raised tobacco prices, pushed to reform civil service pensions and introduced a revised tax settlement scheme, all of which critics argue are designed to squeeze more money out of ordinary wage earners.

"In order to enjoy the benefits of welfare as a right of the people, one must realize that one must bear the cost of paying taxes as an obligation of the people," Kim said, citing the examples of Argentina and Greece, which experienced serious financial trouble due to their short-sighted welfare expansion.

"We must carry out an overall inspection of how our welfare budget is spent," he said. "Based on the results, tax hikes should be pursued when no alternative can be found after seeking the public's opinion."

The main opposition party, the New Politics Alliance for Democracy, offered a different solution to the problem, saying the real reason for the lack of funds lies in tax cuts for the rich.

"Talking about tax hikes in order to avoid withdrawing tax cuts for the rich, after increasing all sorts of taxes for the working class, is the sort of thing Chairman Kim pointed out a politician shouldn't do," NPAD spokesman Park Soo-hyun said in a press briefing. "As the fault lies in tax cuts for the rich, normalizing this should come first."

The opposition party has accused the conservative Park administration of favoring large businesses at the expense of average wage earners, citing various tax benefits for the rich.

South Korea's corporate tax rate on taxable income exceeding 20 billion won ($18.2 million) was lowered from 25 percent to 22 percent during the previous Lee Myung-bak administration. (Yonhap)