[Interview] Kim In-ho, Chair of Seoul Metropolitan Council: "Let's Give 100,000 KRW Disaster Relief per Seoul Citizen from Increased Seoul City Taxes"

According to Chairman Kim's preliminary settlement of last year's local tax collection, revenue from real estate acquisition tax and automobile tax significantly increased, resulting in approximately 3.8 trillion KRW in excess local tax revenue. Even after excluding statutory transfers to the Seoul Metropolitan Office of Education and 25 autonomous districts, more than 1.2 trillion KRW in surplus is expected to remain. He proposed distributing 100,000 KRW worth of Seoul Love Gift Certificates per capita to 10 million Seoul citizens to support individuals and small business owners struggling due to COVID-19.

[Asia Economy Reporter Park Jong-il] “According to the preliminary settlement details of last year’s local tax collection, revenue from real estate acquisition tax and automobile tax increased significantly, resulting in an over-collection of local tax revenue amounting to approximately 3.8 trillion KRW. Even after excluding statutory transfers to the Seoul Metropolitan Office of Education and 25 autonomous districts, it is expected that more than 1.2 trillion KRW of surplus will remain.”

Kim In-ho, Chairman of the Seoul Metropolitan Council, stated in an interview with this publication, “Let’s return some of this excess tax to the Seoul citizens who are struggling due to COVID-19,” and proposed, “Assuming Seoul’s population is 10 million and giving 100,000 KRW per person, about 1 trillion KRW in funding would be required.”

Chairman Kim emphasized, “Seoul has not provided universal support funds like other cities and provinces such as Gyeonggi-do or Suncheon City this year, so it is even more necessary.” He also argued, “If there is a large surplus of collected taxes, returning it directly to citizens is a matter of respect for them and the best way for everyone in the current crisis.”

Chairman Kim added, “To have a direct effect on revitalizing the local economy, methods using local currency rather than cash payments can be considered.”

Below is a Q&A with Chairman Kim.

- Why do you advocate for universal disaster relief payments?

▲ First, it is impossible to individually select and support citizens who are on the borderline of selective support. Since the nationwide emergency disaster relief fund distributed by the government in May last year, Seoul citizens have not received universal disaster relief payments. While Seoul’s selective policy is understandable, during the period when pinpoint support was provided to COVID-19 affected industries, vulnerable groups, freelancers, and special employment workers, many citizens whose households were shaken did not receive support.

Furthermore, the damage caused by COVID-19 is diverse and extensive, not limited to finances, making it nearly impossible to eliminate blind spots in support. Even if individual losses are selected, such work could waste administrative power and costs. Ultimately, universal disaster relief payments are needed for citizens who have been excluded from support so far, those who have been discriminated against by selective support, and those barely getting through this crisis.

Also, it is time to implement measures to stimulate consumption so that the spark of the local economy does not go out completely. We are well aware of Seoul’s efforts to expand selective support as broadly and deeply as possible to save self-employed businesses. Seoul’s ‘Five Major Livelihood Economy Warmth Measures’ announced last February included only expanded loan support, not direct cash support for small business owners. Ultimately, if sales do not improve in struggling stores, closure is only a matter of time.

Providing universal disaster relief payments could also have a multiplier effect by preserving and increasing sales for self-employed businesses. Universal disaster relief payments could provide the initial funding for self-employed businesses to survive this year.

- How do you propose to secure funding for the disaster relief payments?

▲ Assuming 10 million Seoul citizens and giving 100,000 KRW per person, about 1 trillion KRW in funding is needed. Although this is not a small amount and the executive branch may be concerned about fiscal soundness, short-term expansionary fiscal policy is necessary to revive the depressed local economy first, which will then allow Seoul’s treasury to be replenished more abundantly in the future.

Also, it has been confirmed that Seoul’s local tax revenue collected last year was much higher than expected. According to the preliminary settlement details of 2020 local tax collection, the over-collected local tax revenue is about 3.8 trillion KRW, and even after excluding statutory transfers to the Seoul Metropolitan Office of Education and 25 autonomous districts, more than 1.2 trillion KRW of surplus is expected to remain.

There is sufficient capacity to cover the total 1 trillion KRW for universal disaster relief payments with the remaining tax revenue. If there is a large surplus of collected taxes, returning it directly to citizens is a matter of respect for them and the best way for everyone in the current crisis.

Seoul should promptly initiate discussions on universal disaster relief payments with various methods on the table. If we truly care about livelihoods, we must actively support citizens and breathe new life into the fading local economy.

- What is the proposed method of disaster relief payment?

▲ To have a direct effect on revitalizing the local economy, methods using local currency rather than cash payments can be considered. Seoul issued the ‘Zero Pay Seoul Love Gift Certificate’ in January last year to increase sales for small business owners, introducing a payment method that allows small business owners and consumers to coexist amid the economic downturn.

As the purpose is good, users increased, and last year the Seoul Love Gift Certificate recorded sales exceeding 500 billion KRW. Earlier this year, Seoul also issued prepaid gift certificates to increase consumer benefits and continues to encourage the use of local currency.

If universal disaster relief payments are made through the Seoul Love Gift Certificate, usage within Seoul’s local commercial districts can be encouraged, and sales at small business establishments throughout neighborhoods can be evenly increased.

If the period is set to about three months for short-term use, consumption will not be dispersed, and concentrated fiscal expansion is expected.

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