Small Business Owners Association Urges "Tax and Fiscal Research Institute to Discard 'Distorted Report on Local Currency'"

[Asia Economy (Suwon) = Reporter Lee Young-gyu] The Korea Federation of Small and Medium Business Owners and Self-Employed has issued a strong statement of regret regarding the distorted report on local currency by the Korea Institute of Public Finance, a government-funded research institute under the Prime Minister's Office. The federation further requested the government to establish a national research institute for small business owners and the self-employed.

In a statement on the 17th, the federation said, "On the 15th, the Korea Institute of Public Finance released a research report titled 'The Impact of the Introduction of Local Currency on the Regional Economy,' which concluded that local currency is causing losses to the government and harming the regional economy," adding, "This research denies reality throughout the entire process, from the research period to the leakage of conclusions, and is a typical desk research that reached a biased conclusion."

The federation also stated, "Local currency can only be used by small and medium business owners and self-employed individuals in the respective region, which prevents capital outflow and greatly contributes to revitalizing local neighborhood markets," and "Consumers also benefit from purchasing gift certificates at discounted prices, making it a policy that achieves both consumer welfare and the establishment of a virtuous regional economy."

It added, "The Korea Institute of Local Administration estimated in a research report in December 2019 that, as of August 2019, the effects of nationwide gift certificate issuance amounted to a production inducement of 3.2128 trillion won, value-added inducement of 1.3837 trillion won, and employment inducement of 29,360 people, based on an issuance amount of 1.8025 trillion won."

Especially, "The consumption slump caused by the COVID-19 pandemic dealt a fatal blow to socially vulnerable neighborhood markets, namely small and medium business owners and the self-employed, and the first round of disaster relief funds universally distributed in the form of local currency temporarily healed the wounds," adding, "In this process, self-employed individuals felt the power of local currency. In a market situation increasingly bleak due to the market invasion by large distribution conglomerates backed by big capital, local currency was like a ray of light," it highly praised.

The federation criticized, "Nevertheless, the Korea Institute of Public Finance distorted the effectiveness of local currency based on data from 2010 to 2018, before the government began full-scale issuance of local currency," and "Research results based on poor data cannot reflect reality, and ultimately, the research results based on poor data suggested consolidating local currencies issued in each region, showing a lack of proper understanding of the purpose of local currency."

It pointed out, "In conclusion, the research results of the Korea Institute of Public Finance distort reality, and even the intent behind them is questionable," adding, "Expressions such as issuance costs, consumer welfare loss, and budget waste blatantly reveal how the Korea Institute of Public Finance perceives the government's support policies for small business owners and the self-employed."

The federation further stated, "Most of the conclusions simply follow the claims of large conglomerate distribution companies," and "We earnestly request the cancellation of the biased research results of the Korea Institute of Public Finance and the establishment of a national research institute for small business owners and the self-employed that can reflect the voices of reality and produce proper research results."