Gyeonggi Province Announces Financial Crisis Amid 7 Trillion Won Debt

Gyeonggi Province's accumulated debt has reached 7 trillion won, revealing a severe financial predicament. The Gyeonggi Provincial Governor's transition committee likened the current situation to a "granary filled only with debt documents," emphasizing the urgent need for improvements to the local tax system. The committee has begun formulating emergency measures while thoroughly examining the specific financial situation.

A decline in acquisition tax revenue due to the real estate market slump was cited as a key factor in the worsening finances. Acquisition tax revenue, which stood at 11 trillion won in 2022, is now struggling to even reach 8 trillion won. Conversely, demand for welfare budgets has increased significantly. Welfare budgets jumped from 14 trillion won in 2022 to nearly 20 trillion won this year. Matching national and provincial budgets also saw an increase of over 1 trillion won compared to 2022.

While finances are being supplemented through bond issuance and fund utilization, the limit for issuing local bonds has only about 200 billion won remaining. In response, the transition committee advocates for a transition to a grant-receiving entity supported by the central government, alongside a reform to convert a portion of the corporate local income tax, currently a city/county tax, into a provincial tax. Lee Sang-il, the mayor of Yongin City, noted that this would impact city and county finances.