Lee Jae-myung, a candidate from the Democratic Party of Korea, and Kim Moon-soo, a candidate from the People Power Party, identified overcoming low birth rates as a task that must be addressed. Both candidates promised economic benefits to couples who have children. Candidate Lee designed systems to ensure that couples can receive greater tax refunds during year-end settlements by utilizing income deductions and tax credits, while candidate Kim mentioned direct tax reductions.
However, since neither candidate announced specific figures, it is currently unclear who would alleviate the financial burden for couples raising children more. Lee Jun-seok, a candidate from the Reform Party, has proposed overcoming low birth rates by increasing livable benefits, such as access to dedicated parking spaces, rather than focusing on tax support.
◇ Lee Jae-myung promises higher refunds during year-end settlement
Candidate Lee Jae-myung proposed 'resolving low birth rates and aging and establishing care systems' as one of his 10 policy pledges. He stated he would increase the income tax deduction rate and limits in proportion to the number of children and add elementary school tutoring fees to those eligible for tax credits.
Looking at the income tax credit first, currently, a portion of credit card usage that exceeds 25% of total salary during year-end settlements is excluded from taxable income (15-40%). The limit amount for the credit card income tax credit is 2.5 million won (3 million won when salary is below 70 million won). If candidate Lee's promises are fulfilled, those with more children will see their taxable income decrease and their income tax deduction limit increase, leading to larger refunds during year-end settlements.
Tax credits are a more robust tax cut policy as they discount the taxes owed rather than reducing the taxable base. Currently eligible education expenses for tax credits include operational costs for full-day kindergarten and after-school classes for elementary, middle, and high school students. Candidate Lee has stated he would deduct part of the costs for extracurricular academies and sports facility fees for elementary students from taxable income. He emphasized that 'the current tax law allows for tax credits for English kindergartens costing hundreds of thousands of won while not providing for Taekwondo classes for elementary students,' suggesting that the criteria for eligible tax credits should be expanded.
◇ Kim Moon-soo proposes to reduce income tax monthly
Candidate Kim Moon-soo stated he would provide tax cuts during the time children are raised. Since income tax is withheld from wages, couples will experience tax cut benefits each month while raising children. This is a separate policy from increasing the basic income tax deduction from the current 1.5 million won to 3 million won. In other words, if all of candidate Kim's pledges are realized, couples raising children will see both an increase in the basic deduction and a reduction in income taxes.
However, the criteria for the reduced income tax have not been disclosed. In candidate Kim Moon-soo's submitted 10 policy pledges, the income tax cut period is said to be 'during the time children are raised.' This may lead to controversy about whether it will apply only to parents of pre-school children or be extended to parents of minors.
Candidate Kim Moon-soo also stated he would make the tax-exempt amount for childcare subsidies proportional to the number of children, whether raising one child or more. Currently, the tax-exempt limit for childcare subsidies is 200,000 won per month, but candidate Kim proposed increasing this to 200,000 won per child.
He also introduced policies to reduce the financial burden of wedding expenses. He stated he would expand the application of standard contracts related to wedding service businesses that cause various additional fees that frustrate engaged couples. However, this is a project that the Fair Trade Commission initiated but has not achieved notable results. Last month, the commission announced it would establish standard contracts to prevent opaque agreements concerning studios, dresses, and makeup, but because this is a guideline and not mandatory, only a few companies have adopted it.
◇ Support for couples with infertility and establish saving plans when children become adults
Both candidates share a common vision of helping couples with infertility to conceive and providing cash support and educational services to raise children after they are born.
First, candidate Lee Jae-myung stated he would strengthen support for treatment for couples with infertility and gradually introduce a fund for children's independence. The design of this fund can be found in the Child Independence Fund Act (Child Welfare Act and Tax Benefit Limitation Act) proposed by Democratic Party member Im Kwang-hyun last June.
According to the aforementioned laws, the Child Independence Fund receives 100,000 won monthly from the government for children aged 0-18, matched by 100,000 won from the guardians. Assuming an annual return rate of 3%, at maturity, an amount of 62.09 million won will be received. The principal and earnings of the fund are completely tax-exempt. The National Assembly Budget Office estimates this initiative will require an annual budget of 7.1 trillion won.
Additionally, strengthening support for public child care services, promoting cooperative elementary care with local governments, and expanding support for after-school class fees at elementary schools are also included in the 10 key policy pledges.
Candidate Kim Moon-soo also proposed to include cryopreservation and preservation of reproductive cells for infertility in health insurance coverage, as well as increasing support for fertility testing and infertility treatment costs, and expanding support for prenatal check-ups and childbirth expenses.
He stated he would establish a new account called 'Our Children's First Step' for children aged 0-17. Unlike candidate Lee's fund, candidate Kim's option involves bank savings. The 'Our Children’s First Step' account offers government support of the same amount if parents save 200,000 won monthly for children aged 0-1 and 100,000 won for children aged 2-17. At maturity, approximately 50 million won will be received. The People Power Party predicts this policy will require a maximum of 8.5 trillion won in resources.
He also stated that the support for the seedling bank system, which allows basic livelihood children to save up to 50,000 won, will be expanded, where the government currently supports at a ratio of 1:2, with the People Power Party proposing to increase this ratio to 1:3.
◇ Lee Jun-seok steps back from low birth rate pledges
Candidate Lee Jun-seok was the only one among the three candidates not to include low birth rate measures in his 10 key policy pledges. The 10 key policy pledges are a document submitted by presidential candidates to the National Election Commission, where they prioritize 10 pledges. Candidate Lee included department restructuring, reshoring initiatives, and expanding local government corporate tax autonomy.
Subsequently, the party announced its 11th pledge, which is a pause loan. This product allows borrowers to pay only interest for three years after taking a housing mortgage loan, transitioning to repay the principal afterward. Candidate Lee Jun-seok stated he would extend the interest-only payment period by two more years for every minor child.
In addition to financial support, he also stated he would provide dedicated parking, special lanes on highways, and valet services at major supermarkets for households with multiple children by attaching pink license plates to their vehicles.
Candidate Lee Jun-seok views that cash support has limited effectiveness in addressing low birth rate issues. The Lee Jun-seok camp stated, 'So far, a lot of money has been invested to resolve low birth rates, but because it's indirect investment, there is an opinion that this has not solved the problem.' They continued, 'Simply giving money does not answer whether young people will decide to have children or if there are various interconnected economic issues, which we are considering when formulating policies.'