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View more articles by Kim Yoo-sung
Kim Yoo-sung is an Ask a North Korean contributor who left Gil-joo County of Hamkyungbuk-do, DPRK in 2005
Every week we ask a North Korean your questions, giving you the chance to learn more about the country we know so little about.
This week Shuang Lin from Chengdu asks:
I heard that there is no tax system in North Korea. Is this true?
Yes, you’re right – there’s no tax system in North Korea, officially. On March 21, 1974, the Supreme People’s Assembly declared that all forms of taxation abolished in North Korea. To this day, North Korea celebrates “The Day of the Abolition of the Tax System” on April 1, the day the law went into effect that same year.
Yet North Korea still collects taxes from people, just calling it something else. True, they don’t pay directly to the government, but it extorts most of the goods and labor people produce and offer. In short, North Korea collects more taxes from its people than anywhere else.
North Koreans are no longer obligated to give some portion of their income to the government, but they are forced to offer labor free of charge, and if North Koreans had a choice they would rather pay taxes like in other countries rather than have to offer labor and receive nothing in return.
Last year, the North Korean government made an announcement that they would extort only 70 percent of the crops people produce and the citizenry would be allowed to consume 30 percent of what they produced for themselves. Of course, the North Korean government added that the amount they extort would be reduced to 50 percent of the harvest when the country’s economy improves.
No one believes them, of course. Why would they, when North Koreans work so hard every day but the government says they’re entitled to only 30 percent of what they produce through their labor?
It’s ridiculous for Kim Jong Un to make such statements, as if he’s providing a huge favor by letting people keep 30 percent of their own harvests. The real reason they take such a large portion of the crops is to keep the black market from growing any bigger.
When North Korea “officially” abolished the tax system in 1974, the government tooted its own horn by saying, “It was a huge leap forward from the old system and to historical change towards making the dream of Koreans come true.” It goes further, saying they didn’t have to revive the tax system during the Great Famine thanks to the benevolent politics and leadership of Kim Jong Il.
However, since 2000, North Korea has been collecting taxes from its people – only they have a different name for collecting money from their people.
To make things worse, the North Korean economy has suffered even more following the United States’ sanctions and natural disasters. Under such hopeless conditions, both central and regional governments in North Korea faced serious financial debts and difficulty. They had no choice but to begin take money from the people. Hence, they began to charge people for using electricity and water, as well as renting property or land. They made everyone pay the same amount of money no matter how much they used.
This is not very different from the tax system in capitalist states, yet differences exist. First, it’s true that the North Korean government began to collect money from its people for using electricity, water, etc. Still, the amount of tax revenue collected is far smaller than in capitalist states. Second, in most capitalist countries such as South Korea, richer people pay greater amounts of tax money than people who make less. But in North Korea, everyone pays an equal amount of tax money. These two things are the big differences in how the tax system works between North Korea and other countries.
Officially, North Korea declares that it doesn’t have tax system since it pushed for the end of the tax system in 1974. But when you actually look closely, North Korea collects tax like nobody else.
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Editing and translation by Elizabeth Jae
Artwork by Catherine Salkeld