Ambiguous 'Gomujul' Fees... Financial Leakage and Litigation Risks

Board of Audit and Inspection Audits Major Charges Imposition and Collection... Ambiguous Regional Scope to Decide School Site Charges Exemption

[Asia Economy Reporter Ryu Jeong-min] The Board of Audit and Inspection has released an audit report stating the need to specifically establish criteria for imposing school site charges and overcrowding charges. It pointed out that ambiguous criteria for collecting charges lead to local fiscal leakage and litigation risks.

On the 31st, the Board of Audit and Inspection announced the audit report on the "Status of Imposing and Collecting Major Charges." The charges subject to audit include school site charges, overcrowding charges, development charges, ecosystem conservation cooperation charges, and traffic inducement charges.

According to the Board of Audit and Inspection, if a development project is carried out in an area where the school-age population has decreased for more than three years and there is no demand for new school establishment, the school site charge can be exempted.

The Board of Audit and Inspection stated, "the scope of the area used to determine whether there is demand for new school establishment varies for each development project, leading to inconsistent decisions on whether to exempt charges and causing conflicts such as lawsuits."

The Board of Audit and Inspection pointed out, "Michuhol-gu, Incheon Metropolitan City, has imposed charges on all areas citing difficulty in determining the demand area for new school establishment and intends to resolve the issue through litigation."

The Board of Audit and Inspection reported, "We notified the Minister of Education to specifically establish criteria for the scope of the area and timing of judgment to determine the demand for new school establishment due to development projects, and to prepare measures to amend related laws so that the mayor or governor can determine the demand for new school establishment after consulting the superintendent of education."

Furthermore, overcrowding charges were also found to have issues. Seoul Metropolitan City imposes overcrowding charges on those intending to construct office buildings, retail buildings, and mixed-use buildings, which are population concentration inducement facilities, according to the Capital Region Readjustment Planning Act.

The Board of Audit and Inspection explained, "Seoul City misjudged the main use of four buildings (one office building and three mixed-use buildings) as not office or mixed-use facilities, resulting in undercharging by about 17 billion KRW."

Additionally, the Board of Audit and Inspection pointed out, "Seoul City imposed a charge of about 2.9 billion KRW on a building in Gangnam-gu in March 2020, which does not fall under the category of mixed-use buildings subject to charges, and wrongly imposed a charge of about 900 million KRW on the parking lot attached to the lodging facility of a mixed-use building in Songpa-gu."

The Board of Audit and Inspection stated, "We requested the Mayor of Seoul to thoroughly manage related tasks to prevent undercharging or overcharging of overcrowding charges in the future."