Due to an unprecedented drop in tax revenue... Icheon City Enters Emergency Financial Management System

Corporate Income Tax Drops 58%, Local Allocation Tax Also Plummets
"Reconsidering New Investments... Maintenance Budget Cuts Unavoidable"

Gyeonggi-do Icheon City is entering an emergency financial situation due to an unprecedented financial shock.

On the 24th, Icheon City announced that on the 23rd, Mayor Kim Kyung-hee presided over an emergency financial countermeasure meeting to discuss next year's financial operation plan in response to the forecast of an unprecedented financial shock based on next year's revenue and expenditure estimates.

On the 23rd, participants including Kim Kyung-hee, Mayor of Icheon City (center), are discussing next year's financial management plan at the Icheon City Emergency Financial Measures Meeting.
[Photo by Icheon City]

According to the city, among its own revenues, the corporate local income tax, which accounts for the largest portion, was 285 billion KRW this year, but is expected to sharply decrease by 58.6% to 118 billion KRW next year due to the economic downturn. The decisive factor in the sharp decline in corporate income tax is the poor performance of SK Hynix, a leading local company. SK Hynix paid 142 billion KRW in corporate income tax this year, but there will be no tax payment next year.

In addition, as national tax revenues decrease, the local allocation tax granted by the central government to local governments is also significantly reduced, and the Gyeonggi-do adjustment grant is also expected to be cut, further increasing the scale of financial losses.

On the other hand, expenditure demands excluding subsidy projects amount to about 900 billion KRW, increasing by 300 billion KRW compared to this year, making comprehensive expenditure restructuring inevitable.

An official from Icheon City stated, "Except for rigid essential business expenses such as personnel costs, consignment project costs, general office expenses, and subsidy project city burden costs, there is virtually no available financial resource," adding, "This is an emergency situation where not only new investment projects need to be re-examined from scratch but also existing maintenance budgets must be cut."

For now, Icheon City plans to draw the maximum amount of 130 billion KRW from the financial stabilization fund it holds and use it, and to raise the forecast of the net surplus to partially cover the financial shortfall.

Next year's main budget will prioritize support projects for socially vulnerable groups such as the elderly, women, children, and youth, as well as small business owners, while other investment projects such as road construction and social overhead capital (SOC) will be re-examined from scratch.

The city will also strengthen its own efforts. Departmental policy business promotion expenses, which can be flexibly adjusted within business promotion expenses, will be cut by 5-10%, and monthly allowances and travel expenses for public officials will also be reduced. Some employee welfare projects, such as support for overseas experience training for public officials and use of recreational facilities, will be fully suspended until the financial situation improves.

Mayor Kim Kyung-hee said, "An unprecedented 'financial hardship' is expected," adding, "It is a situation that requires sound financial management of subsidies and shared sacrifice."

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