Korea to deliver W11tr in subsidies before Chuseok

South Korea will launch another round of COVID-19 cash handouts for nearly 90 percent of Koreans, as well as other financial support for small merchants, before the Chuseok holiday in September.

Authorities plan to provide 11 trillion won ($9.4 billion) to people in the bottom 88 percent income bracket under this year’s second extra budget, worth 34.9 trillion won. The government aims to distribute 90 percent of the subsidies by the end of September.

The beneficiaries will be selected based on household income, calculated on the basis of national health insurance premiums for June. For example, a four-person household whose members paid monthly premiums of 342,000 won or less will be eligible for the cash subsidies.

Details of the plan, including the exact date of the program launch and where the subsidies can be used, will be announced Aug. 30, according to the Ministry of Economy and Finance on Thursday.

The cash handout program was to be implemented only if the ongoing fourth wave of the pandemic faded away, in consideration of the risks of promoting offline shopping.

The change to the timeline appears to have been affected by growing demand for spending ahead of Chuseok and its impact on the retail sector.

“Due to the fourth wave of COVID-19 and continued strengthening of quarantine measures, small-business owners and self-employed people are facing increasing challenges, while the consumer and business sentiment index in July and August has also been declining for two consecutive months,” Finance Minister Hong Nam-ki said.

For small and medium-sized enterprises and microbusinesses struggling to stay afloat, the government plans to offer some 41 trillion won in financial support before and after the fall holiday.

Out of that amount, some 2.7 million individuals will get tax extensions totaling 6.2 trillion won. The deadline for payment of the value-added tax and aggregate income tax will be extended to January-February next year instead of October-November this year, the ministry said.

Support for deferred payment of social insurance, electricity and gas bills will be extended by three months.

To facilitate seasonal demand for food commodities including eggs, rice and beef before the holiday, the government will increase the supply of 16 major Chuseok holiday items by more than 25 percent from last year, and will start to supply them Monday.

By Park Han-na (hnpark@heraldcorp.com)