The government and the ruling People Power Party(PPP) have agreed to a one-year extension of a temporary tax credit for facility investment that expired at the end of last year.

According to PPP policy chief Yu Eui-dong following a ruling bloc policy meeting on Wednesday, the two sides also agreed to seek a raise in the income tax deduction rate for traditional market transactions from the current 40 to 80 percent during the first half of this year.

The tax credits would require revisions to the Act on Restriction on Special Cases Concerning Taxation.

While forecasting export-driven recovery to expand as inflation stabilizes downward this year, the government and the PPP raised concerns over a possible domestic slowdown from prolonged inflation and high interest as well as weakened investment in construction. 

The participants agreed to focus on the recovery of livelihoods through state economic policies.

Other agreed measures include electricity fare exemption worth 252 billion won, or around 193 million U.S. dollars, for over one-point-26 million small business owners during the first quarter, as well as financial support worth two-point-three trillion won to help ease their interest burdens.

Asked about President Yoon Suk Yeol's pledge the previous day to seek the abolition of income tax on financial investments, finance minister Choi Sang-mok said related legislative revisions would require negotiation between rival political parties.