"How Can They Notify Local Tax Grant Cuts via 'KakaoTalk'? [Hot Interview]"

Im Mi-ae, Democratic Party Lawmaker
"Yoon Government Cuts Budget Arbitrarily Without Supplementary Budget"
"Finance Ministry's Budget Overreach Must Be Stopped"

The National Assembly's Special Committee on Budget and Accounts began comprehensive policy questioning of the government on the 2nd. The committee raised the unprecedented tax revenue shortfall issue from last year. In September last year, the government urgently notified local governments and metropolitan/provincial offices of education that it would not pay KRW 18.6 trillion in local allocation tax and local education finance grants. During the settlement session of the National Assembly, criticism continued that the government's arbitrary decision to withhold funds (불용, meaning unused funds) violated the National Finance Act and other laws. On the 3rd, Im Mi-ae, a member of the Democratic Party of Korea, criticized in a phone interview with Asia Economy, saying, "Even basic local governments do not do this."

You criticized the government during yesterday's questioning.

The local allocation tax and local education finance grants sent by the central government to local governments are supposed to be sent according to a certain percentage of domestic taxes. They are sent quarterly, four times a year, to local governments. However, on September 18 last year, the Ministry of Economy and Finance held a meeting and said, "We will cut the funds because less tax revenue was collected." This was not an official document but was communicated through work messages, phone calls, and even via KakaoTalk in some regions. Because this money disappeared, local police could not conduct night patrols, and firefighters did not receive dispatch allowances. Some local governments suddenly issued local bonds.

Im Mi-ae, elected member of the Democratic Party of Korea, is giving an interview to Asia Economy at the National Assembly on the 13th. Photo by Kim Hyun-min kimhyun81@

What is the problem?

Last year's budget was deliberated and approved by the 2023 National Assembly. The executive branch cannot arbitrarily withhold funds. Originally, the payments were supposed to be linked to domestic tax revenue, so if less tax was collected, the scheduled payments should still be made, and the shortfall should be adjusted by sending less in the following year or the year after. However, the government did not make a supplementary budget and 'arbitrarily' treated the funds as unused. This violated the National Finance Act, the Local Allocation Tax Act, and the Local Education Finance Grants Act.

How will you respond?

Legal measures are being considered, but the reality is that there are no penalty provisions. However, the Democratic Party believes that this practice of the Ministry of Economy and Finance interfering with the budget approved by the National Assembly must be eradicated. Lawmakers will gather to discuss specific countermeasures.

Why did you focus on this issue?

I used to be a county council member and a provincial council member, and when such things happened, local governments would make supplementary budgets. If the government suddenly does not provide funds, local governments make reduction supplementary budgets. The government says it did not make a supplementary budget because of national bond issuance, but reduction supplementary budgets can be made by cutting project expenses. Basic or metropolitan local governments do not make supplementary budgets like this, nor do they arbitrarily tamper with approved budgets, so how can the central government do this?

[Photo by Im Mi-ae, Office of the Democratic Party of Korea]

Tax revenue is insufficient this year as well.

Despite the tax revenue shortfall, they say they will not make a (reduction) supplementary budget. I do not understand why they work so rigidly. Even if a supplementary budget is made, if the government refuses to increase the budget, the National Assembly cannot increase it. They should not lie that supplementary budgets require national bond issuance.

Do you have any goals regarding the settlement review?

The Ministry of Economy and Finance is so powerful that it even controls other ministries' budgets. I believe we need to put a brake on the Ministry of Economy and Finance's arbitrary control over the budget.

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