Byong Seob Kim Jin Hyung Kim

Public Prosecution Reform IV Gov. Innovation & Trust III Why Trust in Government? II I Introduction National Tax Service Reform V Policy Implications & Conclusion VI

Introduction II 1.Describe why emphasizes ‘principle & trust’ as a vision for government innovation. 2. Explain what we have reformed to increase public trust in government. 3. Analyze effect of government innovation on trust in government 4. Suggest policy implications for improving trust in government.

Why Trust in Government? IIII Even in low trust, economic growth achieved in the past But for a leading nation, high level of trust needed Effective policy implementation & realizing policy objectives, high level of trust needed Even in low trust, economic growth achieved in the past But for a leading nation, high level of trust needed Effective policy implementation & realizing policy objectives, high level of trust needed Success in economic recovery Peace in Korean Peninsula But, repeated corruption & scandals Success in economic recovery Peace in Korean Peninsula But, repeated corruption & scandals From Gov.-led State to Governance State From legacy & liabilities of Former Gov. Traditionally ‘in-group’ focused on personal ties ‘Out-group’ & ‘between-group’ belittled: low social trust Traditionally ‘in-group’ focused on personal ties ‘Out-group’ & ‘between-group’ belittled: low social trust Trust Characteristic of Korea

$ $ Why Trust in Government? IIII Ruling entity (politicians and top officials) ‘In-group’ big businessmen favor Corruptive Union between Power & Wealth Two sons of the then-President (Kim Dae-jung) convicted Public detest and distrust high: civic movement Principle and Trust Scandals leading to Public Distrust

Gov. Innovation & Trust IIIIII Local Referendum System Resident Recall System Resident Suit System Promotion of online Participation, and more…. Local Referendum System Resident Recall System Resident Suit System Promotion of online Participation, and more…. Expanding Administrative Information Disclosure Constructing Digital Budget Accounting System Introducing Record Management System Constructing E-Government Infrastructure, and more…. Expanding Administrative Information Disclosure Constructing Digital Budget Accounting System Introducing Record Management System Constructing E-Government Infrastructure, and more…. Innovative Tasks for More Participation Gov. Innovative Tasks for More Transparent Gov. ** For more information, please refer to the book “A New Wave of Government Innovation in Korea

’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ‘05 [ MOGAHA (2005) ) The Number of Annual Application of Administrative Information Disclosure 12,146 21,559 17,146 18,694 26,338 42,930 61,586 86, , , , ,841

Non-disclosure : 11,412(9%) Partial dislcosure : 12,568(11%) Entire disclosure : (80%) Non-disclosure 11,412(9%) Partial dislcosure 12,568(11%) Entire disclosure (80%) Total number of applications cases Total number of applications cases The Number of Disclosure of Administrative Information in 2006 [ MOGAHA (2006) ]

Gov. Innovation & Trust IIIIII Participation, Transparency; from the experiences. Major Factors Complex Factors and Causal Relationship Complex Factors and Causal Relationship Participation, Transparency; Intervening VAR but their correlation to trust is hard to find.

Reform Measures Participation Transparency Trust in Government Citizen’s Expectation Organizational Level A test model of trust in government

IV. Public Prosecution Reform Cases 1. Public distrust in Prosecutor 3. Effect of reform on trust in government Content Analysis Integrity Perception Index 3. Effect of reform on trust in government Content Analysis Integrity Perception Index 2. Reform measures Independence from politics, especially from the President. ‘democratic controls’ of the prosecution - Reinforce the function and role of the Minister of Justice to check prosecutors - Hearing system for the nomination of the Prosecutor General - Civil monitoring and civil Ombudsman have been introduced. 2. Reform measures Independence from politics, especially from the President. ‘democratic controls’ of the prosecution - Reinforce the function and role of the Minister of Justice to check prosecutors - Hearing system for the nomination of the Prosecutor General - Civil monitoring and civil Ombudsman have been introduced. Public Prosecution Reform Case IVIV

(case) Annual frequency of the number of “prosecution reform” citation in Korea’s 5 major newspapers

( Point ) KICAC Integrity Perceptions Index Integrity Score (out of 10 points) Source: Korea Independent Commission Against Corruption (KICAC) (Year) Public Organization Average National Tax Service Prosecutor’s Office

1. Negative Perception on NTS Negative perception began to be imprinted during the Japanese colonial period Such public perception on taxes and behavior of revenue officials remained after independence. As taxes were assessed more or less at the discretion of the tax inspector, exposure to corruption for revenue officials and unfair taxation to some extent was inevitable. Reform measures demanded to root out negative perception and behavior National Tax Service Reform VV

2. Reform measures Major strategy to overcome the problem -to identify all the sources of tax revenue, -without direct contact between tax payer and revenue official Many reform measures were implemented toward this direction since the National Tax Service (NTS) was established in 1966 National Tax Service Reform VV

1999 reform measure - Reorganization of NTS -Credit card, For participation; income deductions, credit card lottery system. More transparency; the rate of credit card payment For participation; income deductions, credit card lottery system. More transparency; the rate of credit card payment National Tax Service Reform VV

2003 reform measure -Hometax -Cash Receipt System Toward participation, various tax support programs for business; income deductions as well as lottery system for consumer. -More transparency; Cash receipt and credit card usage as a percentage of private consumption spending; Estimate of automatic exposure from credit cards and cash receipts Toward participation, various tax support programs for business; income deductions as well as lottery system for consumer. -More transparency; Cash receipt and credit card usage as a percentage of private consumption spending; Estimate of automatic exposure from credit cards and cash receipts National Tax Service Reform VV

200, , , ,000 Cash Receipt and Credit Card Usage as a percentage of Private Consumption Spending (sourced by the National Tax Service 2007) Private Consumption Spending ① Credit Card ② Debit Card ③ Cash Receipt 15.5% 25.5% 39.1% 45.7% 43.9% 42.3% 50.8% 56.9% ( Unit: billion won )

Cash Receipt and Credit Card Usage as a percentage of Private Consumption Spending (sourced by the National Tax Service 2007) ① Credit Card ② Debit Card ③ Cash Receipt 15.5% 25.5% 39.1% 45.7% 43.9% 42.3% 50.8% 56.9% 50 % 25 %

3. Effect of reform on Trust in Government - Integrity Perception Index - Taxpayer Satisfaction index National Tax Service Reform VV

( Point ) KICAC Integrity Perceptions Index Integrity Score (out of 10 points) Source: Korea Independent Commission Against Corruption (KICAC) (Year) Public Organization Average National Tax Service Prosecutor’s Office

(100%) [NTS 2007] Taxpayer Satisfaction Index

Policy Implications & Conclusion VI