[Exclusive] "No Leisure Tax Reduction"… Funding Crisis for 2.4 Trillion Won Gwacheon Racecourse Relocation

"Review Opinions from Ministries on Support Measures for the Relocation of Gwacheon Racecourse Park"

Gyeonggi Province: "50% leisure tax cut not feasible"

Ministry of the Interior and Safety: "Lowering tax rate from 10% to 8% rejected"
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The reduction and exemption of leisure taxes, considered core funding measures for the relocation of Seoul Racecourse Park in Gwacheon, have faced obstacles. Gyeonggi Province has announced its refusal to exempt 50% of leisure taxes, while the Ministry of the Interior and Safety has rejected the proposal to lower the leisure tax rate from the current 10% to 8%. This poses a significant challenge for Korea Racing Authority as it struggles to secure the necessary funds for relocation costs that reach up to 2.4 trillion won, even excluding the site purchase cost.

The Asia Business Daily DB

According to the "Opinions of Ministries on Support Measures for the Relocation of Gwacheon Racecourse Park" obtained by The Asia Business Daily on August 26, both Gyeonggi Province and the Ministry of the Interior and Safety have expressed negative views on tax support in response to Korea Racing Authority's requests, which were reviewed at the request of the Ministry of Agriculture, Food and Rural Affairs. Gyeonggi Province stated that since the project is a national housing supply initiative, the relocation cost should be borne by the state. The province also argued that it is not appropriate to shift the financial burden to local governments by reducing local taxes. Gyeonggi Province estimated that a 50% leisure tax cut would lead to an annual loss of 145.5 billion won in tax revenue, totaling 4.365 trillion won over 30 years.

The Ministry of the Interior and Safety also made clear that it is difficult to accept Korea Racing Authority's request to lower the leisure tax rate. The ministry believes that lowering the rate from 10% to 8% could weaken the independence of local finances, and that tax cuts for a particular industry could raise issues of tax equity with respect to other industries. As a result, both the "50% leisure tax cut" and "leisure tax rate reduction from 10% to 8%" options, which Korea Racing Authority sought to secure resources for relocation, have effectively been blocked.

The problem is that Korea Racing Authority does not have sufficient funds it can secure on its own. The organization estimates that at least 2.3879 trillion won will be needed for the relocation of Gwacheon Racecourse Park. Even when excluding the cost of purchasing new land for the racecourse, costs include 2.2907 trillion won for design, permits, and construction, and 97.2 billion won for relocation expenses such as staff housing, special equipment, labor relocation, and racehorse transport. By contrast, as of last year, the available funds at Korea Racing Authority amounted to only about 140.3 billion won—just about 6% of the required relocation cost. If the start of construction is delayed, the actual amount needed is likely to rise due to increased construction costs.

The Ministry of Agriculture, Food and Rural Affairs says final decisions have not been made on tax support. A ministry official stated, "Gyeonggi Province's refusal to grant leisure tax exemptions is not final, and we are continuing to discuss the issue with the province. If exemption ultimately proves impossible, the government’s basic position is to use the proceeds from the sale of the current Gwacheon Racecourse Park site and to provide additional funding from national sources as needed, to ensure Korea Racing Authority does not suffer financial or operational damages."

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