Pyeongtaek Civic Group Criticizes Gyeonggi Province's Plan to Redistribute Semiconductor Tax Revenue

▲ Gyeonggi Provincial Government and Gyeonggi Provincial Assembly

The Pyeongtaek Development Council, a civic group in the Pyeongtaek region of Gyeonggi Province, has raised objections to Gyeonggi Governor Choo Mi-ae's plan to make corporate local income tax a joint revenue source.

In a statement issued on July 28, the Pyeongtaek Development Council argued, "Pyeongtaek's semiconductor tax revenue is neither an emergency fund for Gyeonggi Province nor a windfall from the sky," adding, "It is compensation for the costs and administrative burdens incurred while accommodating large-scale semiconductor production facilities, such as transportation, environment, and industrial safety."

The council continued, "Leaving the costs and risks in Pyeongtaek while Gyeonggi takes the tax revenue to redistribute it cannot be called win-win cooperation," urging, "Gyeonggi Province should halt discussions on joint revenue sourcing and present alternatives that guarantee regional fiscal sovereignty."

Corporate local income tax is a local tax paid by businesses on their earned income to the local government where their workplace is located. It serves as a major source of tax revenue for cities and counties with large semiconductor plants or industrial complexes.

The plan to make corporate local income tax a joint revenue source involves transferring half of the corporate local income tax, which is currently city and county revenue, to Gyeonggi Province. Part of it would be incorporated into provincial revenue, while the remainder would be re-allocated to cities and counties in the form of adjusted grants.

Governor Choo's transition committee previously reviewed this as a major revenue-expansion measure, and Governor Choo formalized the push for joint revenue sourcing immediately after taking office.

Gyeonggi Province is pursuing the joint revenue sourcing plan with the aim of diversifying its tax revenue sources—which have been heavily skewed toward acquisition tax revenue—to overcome poor financial conditions marked by debts reaching 7 trillion won, and to alleviate tax revenue disparities among cities and counties resulting from the location of the semiconductor industry.

If the joint revenue pooling is realized, cities with semiconductor workplaces within their jurisdictions, such as Yongin, Pyeongtaek, Hwaseong, and Icheon, as well as Seongnam, which hosts large-sclae industrial complexes, would have to transfer a significant portion of their municipal tax to provincial tax, raising concerns that their fiscal situations could deteriorate.

An official from the Development Council stated, "Pyeongtaek City and the city council should immediately form a public-private joint countermeasure committee and launch a joint response with related local governments such as Hwaseong, Yongin, and Icheon," adding, "If Pyeongtaek City's autonomous fiscal authority is severely infringed upon by actual laws or administrative measures in the future, we must also take legal action, including filing a competence dispute trial."

(Photo: Yonhap News)

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