UIJEONGBU — Gyeonggi Province Governor Choo Mi-ae asked the ruling Democratic Party to raise the local consumption tax rate to about 40% in stages and to transfer 5% of corporate tax revenue to regional governments, saying the province needs a more diverse revenue base to stabilize its budget. Democratic Party leader Kim Min-seok responded that the party would discuss the proposals together.
Choo made the request on the 21st at a Democratic Party Gyeonggi supreme council meeting held at the provincial government's northern office building in Uijeongbu, Gyeonggi Province. "Please help us broaden the stable revenue base of local governments by raising the local consumption tax rate," she said. She called for the rate, currently 25.3%, to be raised gradually to 40.3%.
She also asked that 5% of corporate tax revenue be handed over to metropolitan and local governments. "If the state takes 95% of corporate tax and returns the remaining 5% to metropolitan and local governments, Gyeonggi Province would be able to properly build industrial complexes, road and transit corridors and other infrastructure that can support corporate growth," Choo said. "If revenue does not come in on a reasonable basis even as companies grow, it is hard even to maintain and manage such infrastructure, let alone contemplate building new facilities."
Choo also noted that Gyeonggi Province's essential welfare budget has been funded only through September. "If we cannot secure new funds, school meals for children, care for older adults and programs for vulnerable groups and people with disabilities will have to stop one by one," she said. "What the current Gyeonggi provincial government is doing is by no means cutting or scrapping sound programs. It is a struggle to somehow revive programs that were already set to halt." Choo had earlier clashed publicly with Kim after cutting budgets including funding for the province's DMZ International Documentary Film Festival, drawing criticism from the party leader that she had broken an agreement.
Kim said the party would take up the proposals. "Gyeonggi Province has raised these points with an awareness of problems in local finance in general, not just the province's own particular fiscal situation," he said. "We will carefully consider how the general issues relate to the specific circumstances and discuss the matter at the party level to find a direction."
