GUMI/POHANG – South Korea's industrial cities are experiencing sharply divergent fiscal fortunes as shifts in their flagship industries reshape local tax revenues.
In North Gyeongsang Province, Gumi is ramping up infrastructure investment on the back of a semiconductor recovery, while Pohang faces fiscal austerity after being hit hard by the steel industry downturn.
Gumi expects to collect approximately 500 billion won ($360 million) in local taxes this year, up 8.6% from a year earlier and a record high, according to local government data released Sunday. The city attributes the surge to improved earnings at semiconductor materials and components companies.
The city collected 460.5 billion won last year, up 17.4% from 392.3 billion won in 2024, extending a tax revenue recovery trend.
Local income tax, including corporate local income tax, reached 228.2 billion won, accounting for nearly half of total revenues at 49.6%. Vehicle tax and property tax each contributed 14%.
Local income tax, which plunged during the severe semiconductor downturn in 2023, has rebounded rapidly since the second half of 2024 as industry conditions improved.
Major semiconductor firms including Samsung Electronics, SK Siltron, and LG Innotek continue to post record results centered on their Gumi production facilities, suggesting corporate local income tax growth will persist for the time being.
"Preemptive corporate support policies, including facility and operating fund assistance, dedicated project manager operations, and startup ecosystem development, appear to have contributed to earnings improvement and tax revenue expansion," a Gumi city official said.
Gumi plans to allocate this year's revenue increase to infrastructure expansion including roads and transportation, support for vulnerable groups, youth job creation, and future industry development.
"The recovery in industrial sites is translating into tax revenue growth, revitalizing the city's strength," Gumi Mayor Kim Jang-ho said. "We will concentrate investment of secured funds into living infrastructure that citizens can feel and future growth engines."
Pohang faces the opposite situation, hit by simultaneous downturns in its flagship steel and secondary battery industries.
The city's corporate local income tax has declined steadily from a peak of 149 billion won in 2022 to 76.7 billion won in 2023, 57.9 billion won in 2024, and 57.1 billion won in 2025.
Total local income tax last year reached just 155.5 billion won, only 65% of the 241.5 billion won collected in 2022.
The steel industry faces compounding headwinds including U.S. tariffs, low-price competition from China, and a construction market slump, leading to both tax revenue declines and population outflows. Some small and mid-sized steelmakers face bankruptcy risks and have begun production line restructuring and workforce reductions.
"Regional small and mid-sized steelmakers are in such difficulty that they face bankruptcy risks," a Pohang city official said. "Follow-up measures to the K-Steel Act are urgently needed, including practical support measures such as electricity cost relief, carbon neutrality investment support, and securing central government funding for steel infrastructure expansion."
