A hometown effort
In North Jeolla province alone, 12 agencies, including the Rural Development Administration, the National Pension Service and the Land and Geospatial Informatix Corporation, settled in Jeonju city and Wanju county. Despite this, the financial independence of North Jeolla was only 29.6 percent, 15th among the 17 cities and provinces. Gangwon and South Jeolla followed with 27.1 percent and 23.7 percent. These governments continue to struggle.
Perhaps due to the constraints, the local governments called for the introduction of a “hometown tax,” whereby urban taxpayers pay donations to their hometown or choice of local administration and get deductions on their national or local taxes. It is also called the “hometown donation system.”
The Democratic Party’s presidential candidate, Moon Jae-in, promised the hometown donation system, whereby individuals can select a local government and make a donation for tax deduction while local governments will transparently manage and operate the fund through an independent committee. Last year, Rep. Ahn Ho-young of the party proposed a revision to the donation law to allow voluntary donation to local governments.
Ahn Cheol-soo of the People’s Party did not make an election promise regarding the hometown tax, but Hwang Ju-hong initiated a bill on fundraising and allocation for rural development in July 2016. The bill includes ways for urban taxpayers to make donations to local governments of choice through the rural development funds.
The hometown tax is inspired by Japan’s precedent in 2008. While it was not popular at first, the donation has grown from 8.1 billion yen ($72.7 million) in the first year to 165.3 billion yen in 2015. Some local governments get more income from hometown taxes than their own tax revenue. They send local specialties such as rice and seafood to donors, boosting jobs and agricultural consumption, as well.
In Korea, Moon Kook-hyun of the Creative Korea Party first conceived the plan in 2007, diverting 10 percent of local tax paid by urban citizens to other regions. While the hometown tax bill was proposed in 2009 and 2011, it foundered as urban and capital region administrations opposed it.
Last year, the Korea Employment Information Service projected that 84 of the 228 cities, counties and districts, and 1,367 of smaller units of local governments, would disappear within 30 years. Regions are going extinct. When the countryside falls, the nation cannot stand. Presidential candidates need to show more interest in regional development.
JoongAng Ilbo, April 26, Page 33
*The author is a national news reporter of the JoongAng Ilbo.