Following the formulation of this year's second supplementary budget, which includes drastic spending restructuring to overcome its fiscal crisis, Gyeonggi Province announced that radical expenditure restructuring will also be inevitable during the drafting of its 2027 main budget.

In addition, the province unveiled a blueprint to overcome the current crisis by securing additional revenues and improving systems, including tax reforms.

Joo Hyung-chul, Vice Governor for Economic Affairs, made the remarks during a press briefing on the activities of the Fiscal Crisis Overcoming Strategy Task Force held at the Gyeonggi Provincial Government's Gwanggyo Complex on the 31st.

Vice Governor Joo stated, "The most important principle established regarding the 2027 budget formulation direction is to implement a fiscal policy that, while making radical expenditure restructuring inevitable, more robustly takes care of residents' safety and basic welfare without missing Gyeonggi Province's future."

In accordance with these principles, Gyeonggi Province decided to fundamentally re-examine projects that have continued for three or more years, and in principle, sunset projects that overlap between departments or duplicate those independently conducted by cities and counties.

In addition, large-scale projects involving 10 million won or more will have their implementation directions reviewed from scratch, and a "pay-go" principle will be applied to mandate the submission of financial procurement plans when pursuing new projects.

A blueprint for securing additional revenue was also presented.

First, the province plans to drastically raise the collection rate of overdue taxes by strengthening on-site collection activities and fact-finding investigations by the delinquent tax management team.

Along with this, the province plans to discover new tax sources, such as attracting registrations for rental vehicles, and pursue the stable receipt of dividends from operating profits of public enterprises including Gyeonggi Housing & Urban Corporation.

Through these efforts, Gyeonggi Province has set a goal to secure more than 1 trillion won in additional revenue from 2027 to 2030.

Plans to secure revenue through system improvements include raising the local consumption tax rate and allocating a portion of the corporate local income tax.

Judging that acquisition tax, currently a major tax source, fluctuates significantly in collection amounts depending on the real estate market, Gyeonggi Province determined it necessary to increase the proportion of consumption-based tax sources, which have relatively smaller fluctuations. Accordingly, the province is pushing to raise the local consumption tax rate from the current 25.3% to 40%.

The province is also contemplating a plan to convert the local education tax within the tobacco consumption tax into a local resource facility tax to use it as financial resources for firefighting and safety-related purposes.

In the case of the corporate local income tax, 5% will be allocated to the financial resources of the provincial government, and the province also decided to push for the realistic calculation of standard fiscal demand and standard fiscal revenue, which are cited as the reasons why Gyeonggi Province receives no ordinary local allocation tax.

Vice Governor Joo said, "Only when expenditure restructuring, additional acquisition of local taxes and non-tax revenues, and structural system improvements operate like interlocking gears can Gyeonggi Province fully emerge from the fiscal emergency." He added, "We will continue implementation and inspection according to the strategy organized by the TF and closely cooperate by forming a consultative body with the Provincial Assembly."

The Fiscal Crisis Overcoming Strategy TF, headed by Vice Governor Joo and consisting of around 50 members including bureau and division directors and an external expert advisory group, began its activities early this month.

(Photo provided by Gyeonggi Province, Yonhap News)