businesses

March 6 (Asia Today) — South Korea’s ruling Democratic Party has recently increased its engagement with major companies and business groups, a shift analysts say reflects growing economic uncertainty and the political importance of economic performance.

Party leaders have held a series of meetings with industry representatives while launching policy initiatives such as a “KOSPI 5000” special committee and a task force reviewing economic criminal penalties and business regulations.

The outreach marks a change from the party’s earlier image as primarily focused on regulation, positioning itself instead as a listener to industry concerns.

The move comes as tensions in the Middle East, potential U.S. tariff measures and volatility in financial markets raise economic risks. Political leaders have increasingly addressed these issues directly, as economic developments quickly translate into political and legislative debates.

On Wednesday, the Democratic Party held a meeting with business leaders to discuss risks stemming from the Middle East conflict and possible U.S. trade tariffs. Participants discussed concerns including potential disruptions to projects in the Middle East, export slowdowns and measures to stabilize financial markets.

Party officials have also held policy discussions with the Korea Chamber of Commerce and Industry while continuing work through the KOSPI 5000 committee on capital market reforms. Another task force has been examining ways to adjust criminal penalties related to economic activity and ease regulations that business groups say hinder corporate operations.

Economic risks increasingly shape political debate

Analysts say economic shocks are now quickly becoming political issues.

Recent disagreements between the ruling party and opposition lawmakers over legislation tied to investment cooperation with the United States delayed discussions in a parliamentary special committee for several weeks, illustrating how economic policy disputes can quickly turn into political battles.

Economic performance influences political approval

Academic research has also shown that economic conditions can influence political approval and election outcomes.

A study published in a Korean academic journal examining presidential approval ratings from 1993 to 2019 found statistically significant links between approval ratings and macroeconomic variables such as interest rates and inflation.

Research by scholars at Seoul National University also found that voting behavior in South Korea cannot be explained solely by regional political loyalties and is strongly influenced by voters’ economic evaluations.

Similar findings appear in international research, including a study from the University of Cambridge that examined how personal economic conditions and perceptions of national economic performance affect voting decisions in South Korea.

Corporate performance tied to government finances

South Korea’s fiscal structure is another reason the ruling party is expanding contact with businesses, analysts say.

According to the National Assembly Budget Office, national tax revenue in 2024 totaled about 336.5 trillion won ($253 billion), down 7.5 trillion won ($5.6 billion) from the previous year.

Corporate tax revenue alone fell by about 17.9 trillion won ($13.5 billion), making it one of the main reasons for the overall decline in tax revenue.

For the administration of President Lee Jae-myung, which has promoted a broader welfare framework described as a “basic society,” maintaining corporate growth and investment has become increasingly important to sustaining tax revenues needed for expanded public spending.

Still, analysts caution that the ruling party’s outreach should not necessarily be interpreted as a shift toward a pro-business policy stance.

Business groups have continued to raise concerns about legislation such as revisions to the Commercial Act and labor-related bills sometimes referred to as the “Yellow Envelope Law,” which they argue could weaken corporate governance protections.

Some lawmakers have therefore adopted what observers describe as a two-track approach – consulting with companies while continuing to pursue regulatory legislation.

Analysts say the recent outreach to business leaders reflects a broader political strategy combining economic crisis management, legislative coordination and efforts to maintain political support.

— Reported by Asia Today; translated by UPI

© Asia Today. Unauthorized reproduction or redistribution prohibited.

Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260306010001790

Los Angeles cannabis businesses that owe back taxes wouldn’t have to pay late fees and interest under an “amnesty” program proposed by the City Council.

To qualify, the businesses would have to pay their city taxes within three years.

The council’s unanimous vote on Tuesday, asking the Office of Finance to draft language creating the program, comes at a time when city leaders are searching for money to cover basic services after closing a $1-billion budget gap.

More than 500 of the roughly 700 licensed cannabis businesses in the city collectively owed about $400 million in taxes — an amount that includes $100 million in penalties and $35 million in interest, according to an October report from the Office of Finance.

The total amount owed increased to $417 million as of December, according to Matthew Crawford, the office’s assistant director.

But only about $150 million is collectible, since some tax debts are outside of the three-year statute of limitations and some cannabis businesses are no longer operating.

Based on a projection that about half of eligible cannabis businesses would take part in the program, the city would collect about $30 million in back taxes while waiving about $25 million in penalties, the October report said.

Under the amnesty program, about 20% of the revenue would go to the city’s general fund and the Office of Finance. The Los Angeles Police Department and the city attorney’s office would receive about 40% for illegal cannabis enforcement, and the remaining 40% would fund social equity grants to cannabis operators, particularly members of low-income and minority communities that have been subject to disparate enforcement of criminal cannabis laws.

“The city finds itself with a unique opportunity to bring businesses into compliance and, at the same time, properly fund cannabis industry-centric programming,” City Councilmember Imelda Padilla said during Tuesday’s meeting.

Owners of cannabis businesses say the 10% city tax rate on their gross sales is exorbitant, at the same time that illegal cannabis businesses have carved out a chunk of the market.

“Not only are we competing against the illicit market, we’re competing against licensed dispensaries that the city is allowing to stay open who have made it their business model to not pay tax,” Daniel Sosa, who owns four cannabis dispensaries in the city, told the council on Tuesday.

The amnesty program should be mandatory for businesses that are behind on their taxes, and those who default on their payments should have their licenses stripped, Sosa said.

Sosa said that the tax on cannabis sales should be “just like every other business pays in the city: guns, tobacco, alcohol, major, major billion dollar corporations.”

Other business tax rates in the city range from 0.11% to 0.425%, according to Crawford.

Last month, the council placed a cannabis-related measure on the June 2 ballot that, if approved by voters, would close a tax loophole for illegal cannabis businesses and open them up to the threat of civil collection.