The Choi Scandal has been going on for about month now and this Saturday, news hit that the National Assembly passed a 400.5 trillion won national budget on Saturday which will go down as the largest budget in Korea’s history at just over $340 billion. The budget is 14 trillion won more than last year’s budget which is 200 billion won less that what the government proposed. Why did they lower the amount? Could it have anything to do with the Choi Scandal? Many are asking these questions as more and more Korean startups are being investigated to see if they have or had any connection to Choi.
While many feared that President Park’s scandal with Choi would hurt the economy, that does not seem to be the case so far. The government seems to be conducting business as usual. Most of the budget will be spent on fighting unemployment and healthcare. To fight unemployment, the government plans to increase public sector jobs to more than 10,000 by 2017. This would cost close to 50 billion won. Most of the healthcare budget will go to subsidized day care for children ages 3-5.
The new budget also shows that the government will tax the super wealthy 2% more than the previous year to 40%. This will be the first time in history that an income tax rate has went as high as 40%. This could be the pressure from the working class that they want the elites to pay their fair share. The tax increase is expected to take in close to 600 billion won in revenue. 400 billion won of that amount will go into the development of railways and subways. In total 22.1 trillion won will go into Korea’s infrastructure.
So what was taken out of the budget? Any planned investments into diverse cultural projects related to Choi Soon-Sil has been taken out. Basically, any funds that have any ties to Choi have lost their funding. This is where VR startups in Korea comes into play as the “Choi Budget” consisted of a VR fund. Now many of the VR startups that were expecting support will have to look elsewhere.