The government is contemplating whether to extend the activities of four multi-departmental task forces established to support the implementation of the policies of the Yoon Suk-yeol administration. The four organizations have been tasked with various roles, including export support, discovering future growth drivers, tax reform, and managing the fraudulent receipt of subsidies. Recently, as uncertainty in trade conditions has increased due to the new U.S. government taking office, and with the government's decision to re-pursue the amendment of inheritance and gift tax laws that fell through at the end of last year, there is a need for continuity in their work.
According to the government on the 24th, the One-Stop Export and Order Support Team, New Growth Strategy Planning Team, Tax Reform Promotion Team, and Management Team for Fraudulent Receipt of National Subsidies, all under the Ministry of Strategy and Finance, are approaching the end of their terms next month. These organizations are temporary multi-departmental organizations created through a Prime Minister's directive in February 2023, with a duration of two years.
To extend the activities of the organizations, the Ministry of Strategy and Finance recently began discussions with the Organization Planning Division of the Ministry of Interior and Safety. Currently, the heads and section chiefs of each organization have conveyed the reasons for needing an extension of their work.
◇ Export records '15 months in a row plus' observed, slowing trend… 'Export support must continue'
Examining the functions and roles of each organization, the One-Stop Export and Order Support Team has played a leading role in increasing exports. It has supported individual corporations' exports in areas such as trade finance, logistics, and marketing, as well as taken on tasks related to tax issues, budget support, regulatory reform, and trade and diplomatic cooperation raised in the export field.
The government supported export financing last year at a record 370 trillion won and resolved about 1,400 corporate challenges through the support team, including easing customs regulations in free trade zones and raising the limit amount for simplified export declaration (from 2 million to 4 million won). As a result, exports, which recorded five consecutive months of negative growth after October 2022, have continued to be positive for 15 months from October 2023. South Korea exported $683.8 billion last year, an all-time high, an increase of 8.2% compared to the previous year.
The New Growth Strategy Planning Team was established for the government's 'New Growth 4.0 Strategy,' presented as the economic policy vision for 2023. At that time, the government stated it would select 15 major projects needed to secure future technologies, facilitate digital transformation, and expand the gap in strategic industries for long-term promotion.
The main task is to 'nurture' promising sectors that could become the next national strategic industries, which is also related to exports. In just last year alone, it held 26 meetings with public-private consultative bodies and is reflecting the voices of corporations in policies, including promoting regulatory improvements in future industries such as artificial intelligence (AI) and space.
However, concerns are raised that the slowing trend of exports is expected to become more pronounced this year, indicating a necessity for these organizations to continue their export support activities. Especially after the new U.S. government took office on the 20th, uncertainty in the export environment has expanded.
On his first day in office, President Donald Trump signed a total of 46 executive actions. These actions included trade deficit investigations, a review of trade agreements, as well as the repeal of preferential measures for electric vehicles and changes in energy policy. The government recently forecasted this year's export growth rate at 1.5% in its '2025 Economic Policy Direction.'
◇ Resuming the failed amendment of inheritance and gift taxes… The Ministry of Interior and Safety noted, 'Notification of extension expected in early February.'
The Tax Reform Promotion Team was created to improve the inheritance tax taxation system and the real estate tax system. The government has been pursuing a legislative amendment aimed at reducing the top rate of inheritance tax from 50% to 40%. The Tax Reform Promotion Team has established a plan for tasks related to tax reform, including transitioning the inheritance tax system to an estate acquisition tax method and enhancing the link between comprehensive real estate taxes and property taxes, and has been working to improve laws and systems.
However, after the declaration of a state of emergency on December 3rd last year and amid the impeachment process, the government's proposed amendment to the inheritance and gift tax laws failed to pass the National Assembly due to opposition from the parties.
However, looking at the discussions between the ruling and opposition parties, the Democratic Party initially opposed the reduction of the top inheritance tax rate but showed some willingness to negotiate on expanding the child exemption amount for inheritance taxes (currently 50 million won per person). For the ruling and opposition parties to reach an agreement, the operational force of the Tax Reform Promotion Team must also be sustained.
The Management Team for Fraudulent Receipt of National Subsidies has been working on revising relevant laws and systems to ensure 'monitoring of blind spots for securing fiscal soundness,' a national agenda of the Yoon Suk-yeol government. In 2023, it identified and inspected 7,521 suspected cases of fraudulent receipt, resulting in the detection of an all-time high of 493 cases (69.98 billion won) of misappropriation of funds and violations of contracting procedures. The management team plans to announce the status of fraudulent receipts from last year around March.
The Ministry of Interior and Safety is set to analyze the workload and achievements of the four organizations over the past two years and will notify the Ministry of Strategy and Finance about the results of the extension decision. An official from the Ministry of Interior and Safety stated, 'We are comprehensively reviewing the organizations' performance, changes in the administrative environment, and the demand for continuity in their work,' adding, 'The results are expected to be released as early as the beginning of next month.'