|Title||Study on tax support for cultural living expenses to revitalize the cultural and arts activities|
|Writer||Yeon Suhyun||Classification||Arts & Culture Policy||Year||2017|
Study on tax support for cultural living expenses to revitalize the cultural and arts activities
[수시연구 2017-12 문화예술활동 활성화를 위한 문화생활비 세제지원 연구_연수현]
The ratio of cultural leisure expenditure compared to the total consumption expenditure of Korea is lower than the most major industrialized countries and the constraint of household expenditure is a primary factor in reducing the cultural leisure activities of its people. Furthermore, owing to the reduced flexibility of the government finance due to the increase in welfare expenditures for solving immediate social problems, such as the aging of society, the prospect of the government support for the cultural enjoyment activities is expected to be further eroded. As a result, there is a growing demand that the support paradigm for the field of arts and culture should be changed from “supplier direct support” to “consumer indirect support.” This is because the taxation support system, which is a consumer-centered support that encourages choice based on the preferences of the people, can boost the people’s enjoyment of culture by promoting cultural consumption of the people, as well as playing a positive role in strengthening the arts and culture field. This study underscores the necessity of introduction of tax support system for cultural expenditure by first understanding the current state of tax support for national/international arts and culture and the limitation of the current system. We analyzed cultural living expenses by specifying its concept and scope. In addition, we analyzed various issues to support the cultural living expenses tax and designed the model in accordance with the system implementation to calculate the tax revenue loss. The cultural living expenses were regarded in the narrowest sense and to calculate the specific cost, we used the household trend survey provided by the National Statistical Office. In this study, we did not include the fields of contents industry, travel and dining, recreational and sports and instead, focused on culture-related services (performance and theater, etc.) and literature enjoyment (purchase of books). The main features of this study are as follows. First, compared to general households, the ratio of dual-income households and women-led households spending on cultural services was low, while the ratio of books and other print purchases was much higher. Second, despite the increase in the composition ratio of recreational and cultural items among total consumption expenditures, the ratio of cultural expenses was decreasing. In particular, within the cultural living expenses, expenditure related to cultural services increased, while the cost of purchasing books and other printed materials were continuously decreasing. Third, in cultural services, expenditures were rapidly increasing due to the increased use of various contents while all other fields showed a declining trend. Lastly, the ratio of recreational and cultural expenditure as a percentage of total spending increased as the income fifth quintile increased, while the ratio of the amount used for cultural living expenses was decreasing. Next, general opinions on the main issues related to the tax support of cultural living expenses are summarized as follows. First, the tax support for the expenditure of culture and living expenses has its merits that it can efficiently achieve the policy goal of promoting the cultural and arts activities of the people, and further improving the happiness and quality of life of the people while boosting the cultural and arts market. Second, the cultural living expenses is a characteristic of expenditure for individual satisfaction, and the support of the tax on culture and living expenses itself cannot play a role in the income redistribution function, but it can lead to healthy consumption of recreational and cultural services and the problem of the tax deduction system where low-income citizens pay a higher tax can be supplemented by various devices. Third, cultural and art related activities can be included in the category of basic expenses because it can supply the production factor of labor in a stable manner and further increase productivity by improving the labor quality and general quality of life. Fourth, if income tax deduction and exemption from VAT are realized, and it is thought that they can play a positive role in promoting the actual cultural and arts activities of the people, then it is a sound choice to proceed simultaneously with the policy. Finally, we estimated the total tax revenue reduction of three models: income deduction model, special income deduction model, and special tax exemption model for expenditure such as credit card. We found that the tax revenue loss of the government was larger in the special tax exemption model than the income deduction model and in the same income deduction model, which has a limitation on the income deduction model requirement rather than the special income deduction model, it has shown that the tax revenue loss is less for the government. The tax deduction for the books purchased and performance fees that is included in the 2017 tax amendment bill has been shown to symbolize the government’s firm commitment to support the culture and arts field. It is regarded as an important starting point to provide tax benefits directly to consumers who enjoy cultural life and to create a virtuous circle structure that will expand the size of the entire cultural market and stimulate the demands for cultural and arts services. Therefore, it is necessary to implement the suitable system to support the taxation system that can achieve the policy purpose effectively, to expand the scope and benefit pertaining to cultural living expenses, and to diversify the various policies without blind spots to enjoy the cultural and arts activities of the people. Moreover, for effective policy design and implementation, comprehensive quantitative analysis studies such as economic effects and other tax increase effects should be additionally conducted.