March 16, 2018 13:01
The government is mulling drastic measures to get Koreans to have more children and boost the chronically low birthrate, including new taxes to fund costly projects.
The Ministry of Strategy and Finance assigned the Korea Institute of Public Finance to study the policy impact of the taxes, according to officials on Thursday.
Another measure being considered is to create a parental insurance plan like in Sweden and Canada's Quebec. They use insurance fees paid by businesses and workers to finance parental leave.
Governments around the world collect social security taxes, but no country taxes its citizens to fight low birthrates. One government official said, "Gathering trillions of won in taxes could help finance parental leave and also pay for childcare and educational needs."
A 2016 study by the Korea Institute for Health and Social Affairs showed that the main reason many married couples had only one child was because of the financial burden of raising children.
The low birthrate has reached crisis levels, falling to a record-low 1.05 children per woman last year, the lowest in the OECD. The economically active population between 15 and 64 has already started to decline.
Some W126 trillion in government spending over the last 12 years has failed to stem the trend (US$1=W1,065). But imposing new taxes requires social consensus. Proponents say it is necessary to prevent a worst-case scenario, but opponents say the measure will only stir up unnecessary controversy ahead of regional elections in June.
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