Impact of Nuclear Phase-Out... Local Government Funds '83.7 Billion Won' Disappear

Decrease in Local Taxes at Nuclear Power Headquarters... Calculated Based on Power Generation
Local Government Finances Also Worsen... "Measures Needed"

Wolseong Unit 1 (on the right), which has been shut down, can be seen at the Wolseong Nuclear Power Plant in Yangnam-myeon, Gyeongju-si. [Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Jun-hyung] It has been revealed that funds to be invested in areas surrounding nuclear power plants have decreased by more than 83.7 billion KRW due to the Moon Jae-in administration's 'nuclear phase-out' policy. This is the result of a decrease in local taxes paid by nuclear power headquarters in proportion to power generation, following a decline in nuclear power utilization during the previous administration.

According to data submitted by Korea Hydro & Nuclear Power (KHNP) to the office of Lee In-seon, a member of the People Power Party, the local resource facility tax paid by five nuclear power headquarters under KHNP decreased by 4.6 billion KRW from 170.9 billion KRW in 2016 to 166.3 billion KRW last year. According to the Local Tax Act, nuclear power headquarters must pay 1 KRW of local resource facility tax for every 1 kWh of electricity produced. As nuclear power generation decreased due to the previous government's nuclear phase-out policy, the local resource facility tax KHNP must pay also decreased. The estimated reduction in local resource facility tax from 2017, when the nuclear phase-out policy was fully implemented, to last year is 63.6 billion KRW.

Support project expenses for operators also shrank. These expenses are used by nuclear power headquarters for scholarships, welfare, and other purposes within 5 km of the power plants. KHNP's support project expenses decreased by approximately 6.3 billion KRW, from 50.749 billion KRW in 2018 to 44.455 billion KRW last year.

Trends in local resource facility tax and business support project expenses of the Nuclear Power Headquarters.
[Photo by Inseon Lee, Office of the People Power Party lawmaker]

Support project expenses are calculated based on power generation two years prior. This means the decrease could be even greater this year and next year. From 2019, based on the 2017 nuclear power generation, the reduction in support project expenses until last year is about 20.1 billion KRW. Combined with the local resource facility tax, approximately 83.7 billion KRW in funds supporting the finances of areas surrounding nuclear power plants has disappeared.

Given this situation, the finances of local governments where nuclear power headquarters are located have also deteriorated. The proportion of local taxes paid by the Hanbit headquarters in the total tax revenue of Yeonggwang County, Jeollanam-do, where Hanbit Nuclear Power Plant is located, decreased by 14.6 percentage points from 62.2% in 2016 to 47.6% last year. The situation was similar in Uljin County, Gyeongsangbuk-do, where Hanul Nuclear Power Plant is located. The proportion of local taxes paid by Hanul headquarters in Uljin County's total tax revenue decreased by 4.7 percentage points from 61.8% in 2016 to 57.1% last year.

Representative Lee said, "It is thanks to the sacrifice and cooperation of residents in nuclear power areas that we can use affordable electricity generated by nuclear power," adding, "The government needs to prepare active countermeasures."