Rural special tax receipts surge, on track to top 10 trillion won ($6.55 billion) this year

Surplus funds spark debate over expanding rural basic income program

A booming domestic stock market has sent revenues from the Special Tax for Rural Development surging, putting the levy on course to exceed 10 trillion won ($6.55 billion) for the first time in history this year. The windfall is fueling serious discussion about expanding the rural basic income program — broadening its geographic reach and raising monthly payments.

Song Mi-ryeong, minister of agriculture, food and rural affairs, explains the rural basic income program at a ceremony marking the first payment to a resident of Jangsu-gun, North Jeolla Province, in February, when the program made its inaugural disbursements. [Yonhap]
Song Mi-ryeong, minister of agriculture, food and rural affairs, explains the rural basic income program at a ceremony marking the first payment to a resident of Jangsu-gun, North Jeolla Province, in February, when the program made its inaugural disbursements. [Yonhap]

Cumulative receipts from the Special Tax for Rural Development reached 5.7314 trillion won ($3.75 billion) through April this year, according to the government Sunday.

That figure already far exceeds half of last year's full-year total of roughly 9.2 trillion won ($6.03 billion) and is about 3.4 trillion won ($2.23 billion) higher than the roughly 2.3 trillion won ($1.51 billion) collected over the same period last year.

The Special Tax for Rural Development is an earmarked levy designed to strengthen the competitiveness of rural and fishing communities. Its revenue is drawn automatically from multiple sources, including 0.15 percent of the value of Kospi-listed share transactions, along with portions of acquisition taxes and the comprehensive real estate holding tax.

Annual receipts from the tax hovered between 3 trillion and 4 trillion won through 2019 before jumping to 6.3 trillion won in 2020 and 8.9 trillion won in 2021. Collections then stabilized in the high-6-trillion to roughly-7-trillion-won range from 2022 through 2024, before topping 9 trillion won for the first time last year.

If stock market trading volumes continue to grow, this year's receipts are expected to surpass 10 trillion won for the first time in history. The Ministry of Economy and Finance has projected full-year revenue at roughly 13.6 trillion won ($8.91 billion), while the general expenditure budget for the Special Account for Agricultural and Fishing Villages Structural Improvement stands at about 7.3 trillion won ($4.78 billion).

The Ministry of Agriculture, Food and Rural Affairs expects a substantial surplus to emerge by year-end and is in talks with fiscal authorities on how to deploy the excess funds to make the rural basic income program permanent and expand its scale.

The rural basic income program provides residents in designated areas with 150,000 won ($98) worth of local gift vouchers each month. It is currently running as a pilot project covering 17 of the 69 counties nationwide classified as depopulation zones, with a total budget of 304.7 billion won ($199.7 million) allocated for 2025 and 2026.

President Lee Jae Myung recently cited the program's positive results and called for making it permanent, widening its coverage and raising the monthly payment. Speaking during a visit to Belgium on June 9, he said, "Even though the rural basic income was introduced as a two-year temporary project, we are already seeing results at this level — wouldn't the effect be far greater if it were made permanent and the amount increased?"

He added that the recent stock market rally had caused Special Tax for Rural Development revenues to surge by trillions of won, and suggested those funds could be redirected from their traditional uses — rural roads, bridges and other infrastructure — to finance the rural basic income program instead.

Legislative work to make the program permanent is also gaining momentum. A bill to establish a Rural Basic Income Act cleared the National Assembly's Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee in March, and the Ministry of Agriculture, Food and Rural Affairs is pushing for a full Assembly floor vote before the end of the year.

According to the Ministry of Agriculture, Food and Rural Affairs and the National Assembly Budget Office, extending the rural basic income to all 69 depopulation-zone counties would require roughly 4.9 trillion won ($3.21 billion) annually. Raising the monthly payment above the current 150,000 won would push costs even higher.


y2k@heraldcorp.com