Articles, Blog

Korea to become world’s top spender in welfare by 2040

Drastically improving welfare is welcome development. But it may come at a steep price. Considerable tax hikes may be inevitable. Based on next year’s government budget, welfare
costs are on track to jump to a third of the entire economy by the 2060s…, which would
make Korea the biggest welfare spender in the world. Kim Ji-yeon crunch the numbers for us. Kicking the can down the road may not be a
solid approach for the government when it comes to financing its welfare policies. A report by the Korea Economic Research Institute
released on Wednesday… shows the country’s welfare expenses-to-GDP ratio is estimated
to surpass nearly 20-and-a-half percent by 2030… hovering above the predicted OECD
average. By 2040, the ratio is estimated to exceed
27-and-a-half percent, surpassing that of Denmark, Finland, Norway and Sweden… and
by 2060… it could snowball to around the 34-percent level… a major leap from that
of 2015 which stood at 18-and-a-half percent. The report said it took into account variables
associated with Korea’s rapidly aging society including demographic trends and rises in
income… and concluded that a general tax hike to over 35-percent may be inevitable
in Korea by 2060. Last month, the Moon Jae-in administration
proposed to allot more than a third of its three-hundred-82-billion U.S. dollar budget
for 2018 to job creation and social welfare programs… a record on-year increase of 12-point-9-percent. The budget has sparked worries about whether
a general tax hike is inevitable in the coming years… despite reassurances by the administration
arguing to the contrary… citing the restructuring of government expenditures, and increases
in corporation tax and tax on the super-rich. Kim Ji-yeon, Arirang News.

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