Government chops a third from 2014 event budget

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Government chops a third from 2014 event budget

Feeling the pinch in its wallet, the government will slash the budget for domestic and international events, including academic conferences and sports events, next year.

The decision comes at a time of falling tax revenues and local government manipulation of crucial financial resources.

At a ministerial meeting on economic affairs yesterday, Finance Minister Hyun Oh-seok said the public sector should take a lead role in reducing unnecessary expenses.

“It is true the country’s status has been elevated by hosting large international events, but since the tax revenue situation for next year isn’t good, there should be no wasteful spending,” Hyun said.

The Ministry of Strategy and Finance said it will cut spending for international conferences and sports events by a third.

Local governments have demanded 636 billion won ($586 million) for 196 events next year, up 42.7 percent from this year.

“It has become a rampant custom that local governments demand inflated amounts of budgets for their events,” said a ministry official.

Despite a lack of control over their revenue, local governments sometimes spend recklessly, the ministry said.

Gwangju, with the highest dependency of the seven metropolitan areas, is saddled with 15 billion won of debt after being chosen as host city for the 2015 Summer Universiade and the 2019 World Swimming Championships.

An official at the preparatory committee for the swimming event was arrested earlier this month for manipulating a government document related to hosting the event.

Incheon has the highest debt-to-capital rate of 35.1 percent among the cities, with 2.8 trillion won of that debt incurred late last year after it hosted the 2014 Asian Games.

The ministry said it will provide adequate financial support for the two confirmed events in light of international trust in the country, but it will cut back on ancillary sub-events.

Small government agencies in provinces won’t be able to hold events that cost more than 1 billion won.

The central government is going to strengthen feasibility tests for such events and assess the financial ability of host agencies.

“The country’s tax revenue is continuing to decrease due to the delayed economic recovery, and non-tax revenue is also falling,” Hyun said. “In terms of fiscal soundness, the government would have to slash spending significantly, but it can’t do so considering the sluggish economy.”

According to the National Tax Service, the government tax authority collected 97.2 trillion won in the first six months of the year, 9.4 trillion won less than last year.

The government has reached 46.2 percent in its annual target for tax revenue.

Democratic Party lawmaker Choi Jae-sung said in his analysis that the pace of tax collection is the slowest since 1998, when the country was hit by the Asian financial crisis.

BY Song Su-hyun []
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