The South Korean government is expected to introduce the so-called pay-as-you-go system to help ensure its fiscal soundness while working to significantly boost its tax revenues, officials said Sunday.
The paygo is a system widely practiced in the United States and other advanced countries where any increase in direct spending prompted by a new law or revision must be offset by other spending decreases or revenue increases, meaning any new law that requires government spending must find its own resources before enacted.
“The government is currently in consultation with the ruling party to introduce new fiscal principles, including the paygo system, during the regular parliamentary session,” an official from the Ministry of Strategy and Finance said.
The move comes as the growth of the government’s mandatory spending is expected to outpace that of its tax revenues.
Already, the government’s mandatory spending accounts for 47.2 percent of its total expenditures under the government’s budget plan for 2014 that was revealed last week. The finance ministry expects the amount to reach 51.7 percent of all government spending in 2017 amid a growing focus on public welfare, posting an average growth of 6.9 percent per year.
(Yonhap News)
