Choo Mi-ae: Gyeonggi Province sees no tax revenue gain from chipmaker growth

Gyeonggi Province Governor Choo Mi-ae has again called for a reform of the local fiscal system to address the province's financial difficulties.

Choo posted a message on Facebook on Sunday titled "The cause of the illusion that Gyeonggi Province is wealthy," saying that no matter how astronomically the province's gross regional domestic product grows on the back of earnings by chipmakers based there, "Gyeonggi Province does not see a single won more in tax revenue." She said this is "the reason the illusion arises that Gyeonggi Province is rich."

"Gyeonggi Province nurtures industry, builds the infrastructure to support it, and bears the fire department costs to protect the growing population and industrial facilities — yet the additional tax revenue generated as businesses grow does not come back to Gyeonggi Province, and neither does the increased general grant that results from it," she added.

Choo described the situation as a "double contradiction" and called for fiscal reform, saying "fiscal resources must follow where the burdens lie, and the province's rightful funding for carrying out wide-area local government functions must be recognized."

On Saturday, Choo also posted on Facebook citing the example of Gyeonggi Province bearing most of the personnel costs for nationally employed fire department civil servants, writing that "personnel costs for national-level employees are the central government's responsibility, but the reality is the exact opposite — fiscal reform is urgently needed to enable locally driven growth."

She said that even when local governments shoulder fire department personnel costs, those receiving general grants can recover part of the shortfall from the central government, but Gyeonggi Province is "structured so that debt simply accumulates." She said this is because "the central government gives Gyeonggi Province in particular a pittance carved out of tobacco consumption tax — a mere 80 billion won ($56.4 million) — and calls it a contribution toward personnel costs that exceed 1 trillion won."

Earlier, at a press conference on Wednesday, Choo officially declared a "fiscal emergency" in Gyeonggi Province, saying a supplementary budget cutting 770 billion won in spending was unavoidable and pledging to pursue aggressive fiscal normalization measures.