Artful dodgersIn the Korean tax system, revenue that is collected by the central government and passed on to local governments is called the local subsidy tax. The local subsidy tax in turn is divided into an ordinary subsidy tax and extraordinary subsidy tax. The extraordinary subsidy tax is money allocated for special purposes and, in many cases, the standard is ambiguous. More often than not this tax money is allocated on a first come first serve basis. Over 700 billion won ($764 million) of our annual tax revenue is spent in this way. In the past, politicians would use this money for items likes bridges and town halls for their hometowns and would behave as if the money was their own. For decades, tax money had been used to buy popularity in this way.
At the start of his term, President Roh ordered a report on reforming the extraordinary subsidy tax, including the possibility of its abolition. The road map for tax reform presented at the beginning of President Roh’s term called for radical changes in the extraordinary subsidy tax on grounds that it lacked transparency.
Unfortunately, the idea got no further. Since 2005, the extraordinary subsidy tax has been reduced but the total still surpasses 700 billion won every year. The region that received the most extraordinary tax revenue last year was Gimhae in South Gyeongsang, which happens to be President Roh’s hometown. The average tax revenue allocated to the constituencies of members of the budget committee that oversees the management of the extraordinary subsidy tax was some 2 billion won, compared to the national average of 1.4 million won. Such discrepancy even occurred last year after floods had ravaged parts of Gangwon and the province was in dire need of restoration money. Recently, we’ve even had individual bureaucrats who’ve used this extraordinary subsidy tax for personal purposes such as former Blue House policy secretary Byeon Yang-kyoon.
The extraordinary subsidy tax must be reduced. It should only be used for emergencies such as natural disasters. There should also be an objective set of standards for allocations that excludes political or bureaucratic meddling. All projects must be publicly transparent and the National Assembly should examine each one. It is unthinkable that 700 billion won of tax money is used by greedy politicians every year without its purpose being made public.
These politicians have been like the Artful Dodger in “Oliver Twist,” picking the public’s pockets every time we turn our backs.