[비즈한국] The government establishes and operates public institutions to carry out public welfare projects that are difficult for ministries to manage directly, such as railways, postal services, water supply, electricity, and housing. The government provides various financial support to help these public institutions raise the funds necessary to perform these public service projects. A representative method is a capital contribution, where the government directly provides funds.
However, it has been found that local governments are collecting various taxes from these public institutions, citing changes in capital as the reason for the government's capital contributions. A portion of the funds, raised from national taxes for the benefit of the entire nation, is flowing into the coffers of specific local governments. Consequently, there are calls for an amendment to the Local Tax Act, which mandates the payment of registration and license taxes as well as local education taxes whenever capital changes occur.
The government conducts so-called capital contributions, providing financial support in the form of acquiring shares in public institutions so they can expand the capital necessary to operate public service projects. Public institutions receive these government contributions based on their respective establishment laws. According to the National Assembly and various public institutions, as of the end of last year, 40 institutions had received a total of 183.9944 trillion won in government capital contributions. Of these, 35 are public institutions, and the amount they received from the government accounts for 183.5805 trillion won, or 99.77% of the total contribution amount.
By ministry, 10 public institutions under the Ministry of Land, Infrastructure and Transport, including Korea Land and Housing Corporation (41.8256 trillion won), Korea Expressway Corporation (35.0776 trillion won), Korea Railroad Corporation (10.9976 trillion won), and Korea Housing & Urban Guarantee Corporation (6.9621 trillion won), received a total of 103.0169 trillion won in government contributions. In the case of the Ministry of Trade, Industry and Energy, seven institutions, including Korea National Oil Corporation (10.9089 trillion won) and Korea Mine Rehabilitation and Mineral Resources Corporation (2.3351 trillion won), received 14.1750 trillion won in government contributions.
The Financial Services Commission saw four institutions, including Korea Development Bank (26.3166 trillion won), receive 33.4318 trillion won; the Ministry of Economy and Finance saw three institutions, including the Export-Import Bank of Korea (12.8878 trillion won), receive 12.9944 trillion won; the Ministry of Oceans and Fisheries saw five institutions, including Busan Port Authority (2.8790 trillion won), receive 7.6291 trillion won; and the Ministry of Agriculture, Food and Rural Affairs saw two institutions, including Korea Rural Community Corporation (1.5175 trillion won), receive 1.5858 trillion won.
Limiting the scope to the last 10 years (2015–2024), a total of 18 public institutions received government contributions, with the contribution amount during this period reaching 85.8285 trillion won. Korea Land and Housing Corporation received the most at 23.6297 trillion won, followed by Korea Expressway Corporation (16.3015 trillion won), Korea Development Bank (11.1362 trillion won), Export-Import Bank of Korea (9.1252 trillion won), Korea Housing & Urban Guarantee Corporation (5.5439 trillion won), and Korea Water Resources Corporation (4.011 trillion won). The government injected funds raised from national taxes to ensure that public service projects managed by these institutions—such as roads, housing, and water supply—proceed without issues for the sake of the people.
The problem, however, is that these funds—intended for public interest projects for the entire nation—are leaking out as taxes to specific local governments. This is because the current Local Tax Act mandates that public institutions pay registration and license taxes and local education taxes to local governments whenever there is a change in paid-in capital due to government contributions or similar events.
Out of the 18 public institutions that received contributions over the last 10 years, 16 have paid a total of 337.4 billion won (281.2 billion won in registration and license taxes and 56.2 billion won in local education taxes) to the local governments where they are based. Korea Land and Housing Corporation paid 101.2 billion won in registration and license taxes/local education taxes to Gyeonggi-do and Gyeongsangnam-do, Korea Expressway Corporation paid 57.1 billion won to Gyeongsangbuk-do, Korea Development Bank and the Export-Import Bank of Korea paid 53.4 billion won and 30.9 billion won respectively to Yeongdeungpo-gu, Seoul and Seoul City, Korea Housing & Urban Guarantee Corporation paid 22.6 billion won to Nam-gu, Busan and Busan City, and Korea Water Resources Corporation paid 20.7 billion won to Daedeok-gu, Daejeon and Daejeon City.
Public institutions established for the public interest are paying a portion of their government-contributed funds as taxes simply because they received the capital. This ultimately means that part of the policy funds meant to be used for all citizens is entering the tax revenue of specific local governments, being used instead as project funds exclusively for the residents of those regions.