Choo Mi-ae: Gyeonggi's Fiscal Crisis Caused by Outdated Local Tax System, Not a Subject for Political Debate

▲ Gyeonggi Governor Choo Mi-ae holds a press conference to declare a "fiscal emergency in Gyeonggi Province" at the Gyeonggi Provincial Government complex in Suwon, Gyeonggi Province, on August 5.

Gyeonggi Governor Choo Mi-ae emphasized on August 6 that "the fiscal crisis in Gyeonggi Province is due to an outdated local tax system."

Writing on her Facebook page that day, Governor Choo stated, "It is time to overhaul the local tax system. Please do not turn this into a political debate."

Previously, Governor Choo declared a "fiscal emergency" during a press conference on August 5, stating that a supplementary budget cut of 770 billion won is inevitable.

In response, controversy has arisen, with opposition parties and others analyzing that the distribution of disaster relief funds between 2020 and 2021, when President Lee Jae-myung served as Gyeonggi governor, marked the beginning of Gyeonggi's fiscal crisis.

In her post, Governor Choo argued, "Seoul, which has almost no factory facilities, ranks first in corporate local income tax revenue, but Gyeonggi Province, where factories, industrial complexes, supporting personnel, and research facilities are densely concentrated, cannot collect a single penny of corporate local income tax because it is not a provincial tax." She added, "This is the difference from Seoul."

She continued, "Gyeonggi Province bears massive costs and sacrifices for sites, roads, railways, water, and power supply to maintain and grow industries, but the tax revenue generated by growing corporations does not return to Gyeonggi Province."

She stated, "The structure where local governments that pay massive costs to support industries cannot secure the tax revenue generated from those industries must be changed."

Governor Choo also pointed out, "Gyeonggi Province's top tax revenue source is the real estate acquisition tax, and during the past development era, it was possible to get by on acquisition tax." She added, "However, the development era is over, and acquisition tax revenues are also decreasing."

She further noted, "It is estimated that it will drop by 65% next year," adding, "While the industrial structure has completely changed, only the tax revenue structure remains stuck in the past."

(Photo: Yonhap News)

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