The National Assembly on the 2nd passed the budget for next year by agreement between the ruling and opposition parties. As the first budget drawn up by the Lee Jae-myung administration, the amount remained at 728 trillion won as in the government proposal. Tax law amendments that raise corporate tax and education tax and introduce separate taxation of dividend income also passed.

That night the Assembly held a plenary session and approved the budget for next year. Of 262 members present, 248 voted in favor, 8 against, and 6 abstained.

It is the first time in five years, since 2020, that the budget for the following year was finally passed by the Assembly within the constitutional deadline. This resulted from a surprise agreement reached that morning by Democratic Party floor leader Kim Byung-gi and People Power Party floor leader Song Eon-seok, who continued negotiations after the Special Committee on Budget and Accounts finished its review.

Kim said at the party’s floor countermeasures meeting, “이번 합의는 민주당이 민생 회복과 미래 성장을 반드시 이뤄내겠다는 의지로 협상장을 끝까지 지켜낸 결과” and Song said at the party caucus, “민생 예산이 중요하기 때문에 기한 내에 처리하기 위해 대승적으로 합의했다.”

The total amount of next year’s budget is 728 trillion won, the same as the original bill the government submitted in September. The two parties cut 4.3 trillion won in some programs and increased 4.3 trillion won in others, keeping total expenditures unchanged.

They decided not to reduce budgets for key policy tasks of the Lee Jae-myung administration, such as support for issuing Local Love gift certificates and the National Growth Fund. The presidential office special activity expenses budget, which became a point of contention after the People Power Party demanded cuts, was also not reduced. Budgets for artificial intelligence (AI) support, policy funds, and contingency reserves were partially cut.

Some items requested by each side were increased. In line with the Democratic Party’s position, budgets were raised for building a disaster recovery system at the National Information Resources Service, which suffered fire damage; fostering the distributed power grid industry; and an AI mobility demonstration project. Items championed by the People Power Party were also increased, including support for installing city gas supply pipelines, national scholarship support, and the participation honor allowance for meritorious veterans.

The ruling party placed significance on having secured core state policy budgets in the first budget of the Lee Jae-myung administration. Lee So-young, a Democratic Party lawmaker who serves as the ruling party secretary on the budget committee, wrote on Facebook, “이재명 정부 국정과제 예산, 대통령 주요 정책과 당 핵심 정책 예산을 거의 전혀 삭감되지 않은 수준으로 지켜냈다” and added, “AI 분야나 펀드 사업에서 삭감은 정부 계획의 정상 추진에 지장이 없는 수준.”

The opposition credited itself with blocking any further increase in the total budget, which is up 8.1% from this year. Park Hyung-su, a People Power Party lawmaker who serves as the opposition secretary on the budget committee, told reporters, “109조원 적자 부채를 발행해 마련한 예산이라 순증하면 안 된다는 생각이었는데 이를 관철한 게 가장 큰 성과” and “AI라는 이름으로 산재해 방만 편성된 것들을 정리하고 삭감했다.”

With the Democratic Party, which holds a majority of Assembly seats, signaling its intent to process the bill within the legal deadline and applying pressure, the People Power Party chose a compromise that secured some gains, leading to agreement. A key figure in the Democratic Party floor leadership said by phone, “이재명 정부 첫번째 예산인 만큼 국민의힘 요구 사항을 과감히 들어주며 최대한 합의 처리하고자 했다.” Song said at a party caucus, “다수당이 수적 우세를 앞세워 일방적 폭거를 일삼는 상황” and “협상은 서로 주고받는 것이기에 어쩔 수 없이 그 정도로 합의했다.”

Budget-related bills to increase corporate tax and education tax cleared the Assembly as the government had proposed after bipartisan agreement fell through. The corporate tax rate rises by 1 percentage point in each taxable income bracket to 10% for 2 billion won or less, 20% for over 2 billion up to 20 billion won, 22% for over 20 billion up to 300 billion won, and 25% for over 300 billion won. The education tax rate applied to the revenue amounts of financial and insurance businesses becomes 1.0%up 0.5 percentage pointwhen the tax base exceeds 1 trillion won. An amendment to the Restriction of Special Taxation Act that introduces separate taxation of dividend income with a top rate of 30%, as agreed by the two parties, was also passed at the plenary session.

Before placing next year’s budget on the agenda at the plenary session that day, National Assembly Speaker Woo Won-shik said, “여야 갈등이 심한 상황에서도 대화를 통해 서로 양보하며 합의에 도달했다” and “경제 활력과 민생 회복을 위해 모두의 역량을 모아야 할 때 아주 잘한 일.”

Speaker Woo said, “그동안 정치가 멈춰선 것 아닌가 하는 국민의 걱정이 컸다” and “오늘 보여준 여야의 책임 있고 성숙한 태도가 경색된 정국을 푸는 걸음으로 이어지고, 앞으로 필요한 민생과 개혁 과제에서도 여야 협력의 길을 열어가는 출발점이 되기를 기대한다.”