Korea's finance minister vows stronger fiscal expansion

Finance Minister Yoo Il-ho said in a government meeting on fiscal strategy in Seoul. "In order to take such roles, the government has to make constant efforts to maintain sound public finance."

The Korean government unveiled a set of stimulus steps last week, including a plan to draw up a 10 trillion-won ($8.6 billion) extra budget, to buttress the economy that has been suffering from waning exports and flaccid domestic demand.

Korea's exports posted negative growth for a record 17 straight months as fast-falling oil prices dampened demand from emerging markets.

Retail sales have seemed to offset the downturn in outbound shipments on the back of the government-led tax-cut programs and temporary holidays, but recent data show that the upbeat trend is slowing down to some extent.

On the external side, the global financial market has become widely volatile, further triggered by the recent British vote to leave the European Union, or Brexit.

Against this backdrop, the top economic policymaker has put a larger emphasis on the role of fiscal policies in the midst of rising uncertainties at home and abroad, saying that the expansionary fiscal policy and other stimulus measures will help minimize the downside risks and prop up the economy.

"We are facing frequent external threats such as Brexit and North Korean provocations that stir up market sentiment in a negative way," said Yoo, who is also the deputy prime minister for economic affairs.

Earlier, international organizations like the International Monetary Fund and the Organization for Economic Cooperation and Development called for more aggressive fiscal intervention into the economy by the South Korean government, citing relatively sound finance.

Meanwhile, the finance ministry said it has no plan to raise corporate tax or value added tax in a scheduled tax code revision later this month.

"It is not the right time to increase corporate tax as a hike may weigh heavily on corporate investment and the entire economy," Vice Finance Minister Choi Sang-mok said in a briefing in Sejong. "We're also negative about raising value added tax."

He said Korea's corporate tax is slightly higher than other rival countries, while major economies including Britain came up with a corporate tax cut program to attract more investment.

In a parliamentary session held earlier this week, the main opposition party, who gained its majority in the April general elections, demanded the finance ministry increase corporate tax, insisting that the business sector is receiving more benefits than ordinary paid workers. (Yonhap)