Busan paid 12.1 billion won in subsidies to tax delinquents

Busan's audit commission has found that city departments, agencies and district governments repeatedly failed to verify whether recipients of local subsidy projects had outstanding tax debts before awarding them public funds.

The commission released the findings Friday from a targeted probe into local tax delinquency conducted from Dec. 4 to Dec. 24 last year. The audit covered departments managing private-capital subsidy projects launched on or after Jan. 1, 2022, as well as all 16 of the city's districts and counties. It was prompted by Busan's steadily declining fiscal self-reliance rate, which fell from 43.0 percent in 2022 (against a national average of 45.3 percent) to 40.8 percent in 2024 and 38.4 percent in 2025, well below the national average of 43.2 percent.

Under national guidelines on local subsidy management, heads of local governments must check whether applicants have unpaid local taxes or non-tax revenue obligations when selecting subsidy recipients and determining grant amounts.

The audit found that of 546 subsidy projects carried out by city departments and the 16 districts and counties, only 95 — or 17.4 percent — had verified applicants' tax status, typically by requiring a certificate of full tax payment. The remaining 451 projects, accounting for 82.6 percent of the total, involved no check of either local tax or non-tax revenue delinquency.

As a result, approximately 12.12 billion won in subsidy funds was paid to recipients who collectively owed 428 million won (about $280,000) across 1,009 counts of unpaid local taxes and non-tax charges. Among the delinquencies, 461 counts involved fines and 133 involved resident taxes — obligations that all citizens are required to fulfill.

The commission recommended that the city revise its subsidy ordinance to explicitly require checks on applicants' local tax and non-tax delinquency status when selecting recipients and setting grant amounts, and that delinquency records be factored into subsidy performance evaluations.

"We will establish a proper system to restrict subsidy support for delinquents and raise awareness among subsidy project operators so that a culture of faithful tax compliance can take root," audit commission Chairwoman Yun Hui-yeon said.