Abstract

Recently, Korea is suffering from economic crisis occurring in suburbs as people capable of employment living in suburbs has moved to large city. Due to this depression in local economy, for certain district, they are likely to face financial bankruptcy as they are not capable of handling fees payable for employment, welfare as well as legal and obligatory expenses from deficiency in tax income including local tax income. Application for tax levied for support of hometown is desperately needed due to abovementioned reasons and law amendment supporting this has been revised in parliament house. Recently, in order to grant autonomy and responsibility on local finance, ‘Law for supporting hometown’ (Tentative name) has been introduced as part of government financial plan for five years to solve financial imbalance between each financial body and deficiency in local finance through improving tax structure and expansion in involvement of local people on financial budget. Therefore, in this research, followings are proposed if law for supporting hometown is to be introduced. Firstly, contribution made for hometown shall be subjected for tax deduction in national tax(Income tax). Secondly, tax deduction for income tax shall be taxed 40% of taxable income in maximum capacity, to 200,000 KRW, contributed amount shall be subjected for tax deduction, 30% of contribution amount over 200,000 KRW to 10,000,000 KRW shall be deductible, 35% for over 10,000,000 KRW to 20,000,000 KRW and 40% for amount over 20,000,000 shall be deductible. Also, 10% of deductible amount shall be deducted within 40% of local income tax. Thirdly, local organization may provide return(Excluding cash and cash equivalent) under 30% of the contribution amount to taxpayer who made hometown contribution. Fourthly, organization that receives contribution shall be subjected to all local organization. Lastly, for the contributed amount and object, donator shall choose the purpose of contribution(Field or business) and rule shall be amended forcing local organization to disclose contribution detail.

Keywords

• Tax Levied for Support of Hometown
• Local Organization
• Tax Deduction
• Contribution

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