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Fiscal Status of North Korea Government after the Liberation and the Temporary Fiscal Policies

Yea Dae-Yeol 1

1고려대학교

Accredited

ABSTRACT

After liberation of Korea in 1945, it was imperative for North Korea to maximize the state finance in order to solve the challenges faced in economic area. However, North Korea government had to implement economic reconstruction within the limitations of which were economic collapse brought by Japanese imperial economic policy as well as the absence of fiscal space. During early liberation period of 1945, each local People’s Committee had tried to solve a shortage of financial resource through lottery ticket, contribution, and imposing new taxes. But there were neither unified local policy, nor connections with national fiscal plan. Consequently, in December 1945, financial bureau of 10 administrative bureaus in North Korea sought to fund for state-building through organizing taxation system. The previous 58 tax-types, which included 32 national taxes, 13 provincial taxes, and 13 city and county taxes were simplified into 21 tax-types. Among previous national taxes, land tax and a business tax(a group of profit tax), a liquor tax and drink tax(a group of consumption tax), the individual income tax and a corporate income tax(a group of income tax), registration tax, inheritance tax, and gambling tax were remained. Among other taxes, the taxation for military purpose in the late Japanese imperialism was all abolished. The provincial tax such as surtax and special tax as one of local tax were remained. Ironically, most of national taxes and local taxes which targeted the haves for Japanese wartime financial demand were maintained. Meanwhile, North Korea issued military payment certificate(M.P.C.) to supply lacked currency. To North Korea government, issuing M.P.C. was financing solution designed in the condition of which new currency publication was difficult and there were many moneytary outflow to Japan during early liberation period of 1945. On the other hand, the Soviet Union regarded M.P.C. as a way to arrange finance for their military deployment as well as to avoid inflation in the Soviet Union.

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