Tax? What Tax? The North Korean Taxation Farce

In North Korea, April 1st is commemorated as “Tax Abolition Day.” Ever since the law, “On Completely Abolishing Taxes,” was ratified through the Supreme People’s Assembly on March 21, 1974, North Korea has claimed both within and without to be the only country in the world that does not collect taxes. However, their claim is only for propaganda purposes, for North Koreans labor under a list of state-imposed taxes and duties which grows longer day by day.

Take the example of electricity. Power distribution center members in every city and town visit households in their region alongside the chairperson of the local People’s Unit, whereupon they collect electricity payments according to the number of electric bulbs and electronic equipment therein. This process is done quarterly. In the late 1990s, the quarterly electricity bill per household in Pyongyang was about 20 won. To reduce costs, of course there were people who removed electric bulbs and hid electronic equipment such as irons whenever the power distribution center had workers in their neighborhood.

Since the 2002 economic management reforms were announced on July 1, however, electricity bills have increased greatly. For families living in luxurious apartments in the Jung-district of Pyongyang with televisions, refrigerators and electric fans, households pay as much as 800 or 900 won per quarter.

After the so-called July 1 Reform Measure, troubles between the power distribution center and the people increased. The North Korean people were understandably displeased with the power distribution center, for it was trying to collect money for a utility whose availability was and remains far from regular.

Next, let’s look at reserve food and organizational expenses. North Korea has nine levels of food distribution. From 100g to 900g is supposed to be distributed per day depending on the level, but for the purpose of stocking up reserves, up to 100g is collected from the people instead. Additionally, people are forced to submit approximately two percent of their salary for organizational expenses.

Next, to support for the construction of historical sites. North Korea emphasizes the “voluntary participation” of the North Korean people under the Party apparatus and workers’ organizations. Construction of historical sites for the idolization of Kim Il Sung and Kim Jong Il is frequently organized. Also, officials often collect money from people in order to support those construction projects of which the cabinet is in charge.

Then there is free education. It is officially called “free education,” but school administration expenses are all covered by students and parents. Students have to collect waste paper, waste iron and waste rubber, or raise rabbits and submit the pelts to school. After 2000, there have even been students engaging in business around markets in order to provide supplies for submission to the school.

Onwards, then, to market stands rental fees. After the July 1 Reform Measure, the amount of tax collected at markets suddenly increased. Market stand rental fees already existed before the July 1 Reform Measure but, after 2002, market management centers started collecting market management tax as well, basing it on each product sold. Noodle sellers paid ten won per day, while soybean curd sellers paid three won.

Market stand rental fees became more systematic as well after general markets opened in late 2003. According to the product being sold and daily sales figures, market management centers charged rental fees. In present-day Nammun Market, Hoiryeong, the stand rental fee is said to have been fixed at 100 won per month.

Separate from the stand rental fee, monthly tax is charged on products for sale in the markets. For example, Nammun merchants pay additional taxes of 300 won for industrial goods, 180 won for pork, 150 for cigarettes, alcoholic drinks and fish, 120 won for food and 100 won for general merchandise.

So, while the North Korean media deliver their diet of propaganda promoting North Korea as the world’s only taxless country, be wise to the reality of the North Korean people suffering under an increasing tax burden.