Choo Mi-ae Repeatedly Urges Local Fiscal Reform: "Finances Should Follow Where the Burden Lies"

Gyeonggi Province Governor Chu Mi-ae continues to stress that "state finances should follow where the burden lies," calling for a major overhaul of the current local finance structure.

On August 9, Governor Chu posted an article titled "The Cause of the Gyeonggi Province Wealth Illusion: Gyeonggi's Finances Trapped by Double Contradiction" on her social media, emphasizing that despite its concentration of industry and population, Gyeonggi Province is at a structural disadvantage in terms of finances, and thus a reform of the local finance system is necessary.

According to Governor Chu, the first issue she raised is the structure of the Local Shared Tax. As South Korea's industries grow, with corporate profits and national tax revenue such as corporate taxes increasing, 19.24% of national tax revenue is allocated to the Local Shared Tax fund. However, Gyeonggi Province, as a region not eligible for the Ordinary Local Shared Tax, does not sufficiently benefit from this increase in national finances.

The total amount of the Ordinary Local Shared Tax stands at approximately 66 trillion won annually. This system distributes national funds so that local governments can handle basic administrative demands, yet Gyeonggi Province does not receive any.

One notable example cited is the labor costs for firefighters. As of July 2026, out of the 67,000 city and provincial firefighters nationwide, about 11,000 are in Gyeonggi Province, accounting for roughly 17% of the total. Governor Chu explained that Gyeonggi Province bears approximately 1.1 trillion won in labor costs for firefighters, despite their status being converted to national employees.

Whereas other local governments eligible for the Ordinary Local Shared Tax can partially offset insufficient finances with national funding, Gyeonggi Province, as a non-eligible entity, finds such compensation difficult. In addition, Gyeonggi Province has contributed around 400 billion won to the Regional Co-Prosperity Fund for other cities and provinces each year, and support from the central government for firefighter-related funding is only about 80 billion won, according to Governor Chu.

Gyeonggi Province Governor Choo Mi-ae's post on her SNS on the 9th

Governor Chu especially defined the link between Gyeonggi's industrial growth and its financial burden as a "double contradiction." When large-scale industrial facilities such as semiconductor plants are established in Gyeonggi Province, infrastructure like roads and water supply must be expanded, and transportation and environmental problems must be addressed. As industry and city scale grow, administrative demands for firefighting, rescue, and safety also increase in tandem.

However, even when national tax revenue such as corporate tax increases due to corporate growth, those taxes accrue to the central government. While increased national tax income results in a larger Local Shared Tax fund, Governor Chu argues that Gyeonggi Province, which does not receive the Ordinary Local Shared Tax, does not directly benefit from this increase.

She emphasized, "Gyeonggi Province develops industries, builds the supporting infrastructure, and even covers firefighting costs for the growing population and industry—but the increased tax revenue from corporate growth does not return to Gyeonggi. Even the increased Local Shared Tax sourced from those taxes does not come back to Gyeonggi Province." She went on to say, "No matter how much we build industrial infrastructure and create jobs, Gyeonggi ends up with rising burdens and growing debt due to this double contradiction."

She also criticized Gyeonggi's financial structure for failing to adequately respond to shifts in industry and population. Even as the province attracts businesses and expands jobs to strengthen its industrial base, its major revenue sources still heavily depend on acquisition taxes from real estate transactions.

Governor Chu asserted, "Korea's industrial and demographic structures, as well as the responsibilities local governments must shoulder, have changed completely, but the local finance system remains based on outdated standards." She called for a comprehensive review of the local finance system, adding, "Gyeonggi is not asking for special treatment, but now is the time to adapt the framework of local finance to the realities. Financial resources should follow the regions that bear the burden, and we must recognize resources that naturally allow large-area local governments to perform their duties."

This content was produced with the assistance of AI translation services.