United Nations Public Service Awards Case Studies

The City of Seoul is running a transparent tax administration system that refunds erroneously levied taxes to citizens. This system is called ‘Civil Tax Court (Yet, it is not an actual court. Since this system adopts the similar methods to how the real court works in order to provide transparent services for citizens, it was named ‘Court’) which was developed by Seoul City for the remedy of citizens’ rights. Under the new system, the protest procedures with regard to local taxes are completely open to the general public. In addition, once a petition for abatement is filed, the relevant petitioner is granted an opportunity to appear in the court and deliver his or her statement of reasoning, while an official from the Tax Division (civil servant of Seoul City) speaks in favor of the citizen petitioner. As such, the Civil Tax Court is a new tax remedy system that gives priority consideration to citizens.

Under the current Local Tax Act, if a citizen files for examination or objection with regard to local taxes, the Local Tax Deliberation Committee reviews the facts and contents of the petition in a manner closed to the public. Consequently, it was impossible for the petitioner to confirm his or her case was thoroughly reviewed, and they only received a written notice of the decision made by the Committee.

Even in Germany and Japan, tax-related reviews are made in closed sessions based on a documentary deliberation. Such a government-oriented system for tax petition is not open to the general citizens as well as the petitioner, leading to lack of objectivity and credibility of the review result, and this is likely to increase distrust of deliberation results.

In addition, filing a petition requires professional assistance from such experts as a tax accountant and a lawyer, creating a substantial amount of expenses. Therefore, working-class citizens, who make ends meet, find it difficult to make a costly appeal while there is no guarantee that the result will be positive. Under these circumstances, the Civil Tax Court was proposed as a solution.

What is the initiative about? (the solution)
- Enhanced Transparency through Open Deliberation - The City of Seoul took the step to protect the rights of people and enhance the transparency of the deliberation procedures by carrying out the deliberations in a manner that is open to the public and that allows petitioners to make their statement in court. - The Professional Review Committee headed by Incumbent Judge - The Tax Deliberation Committee, which makes the final decision on a request for a tax-related review, is comprised of experts, such as attorneys-at-law, accountants and tax accountants, and headed by an incumbent judge to ensure objectivity and credibility of its decisions. - Seoul City Tax Officials Speaking for Citizens Lacking Expertise - Seoul City tax officials are designated as special tax advocates and help citizen petitioners in preparing for the review deliberation. In particular, they speak for the under-privileged free of charge - Transparent Tax Service System Offering Opportunities for Tax Authority To Improve Themselves - The adoption of a transparent procedure will help secure the propriety of the system for taxation and provide an opportunity for self-reflection/correction concerning erroneous imposition of taxes on the part of tax officials. The Civil Tax Court is part of the efforts for institutional innovation aimed at accurate tax administration. Since the adoption of this system, the number of cases of erroneously imposed taxation has fallen by as much as 23.5%.

Who proposed the solution, who implemented it and who were the stakeholders?
Yoo Sang-ho, the Head of the Tax Division, proposed the Civil Tax Court at a meeting for the development of people-oriented policies on February 28, 2008. It is acclaimed as an attempt made by public officials to meet the demand of the 21st century, in which creativity and imagination equal competitive power, and to earnestly renew the organizational culture of the City of Seoul from a perspective of its people. At a session of the Civil Tax Court, three parties express their views, taking turns, in an open session. (The three parties refer to the taxpayer who submitted the request for a tax-related review, the tax official of the district office that imposed the relevant tax, and the Seoul City tax official speaking on behalf of the taxpayer.) Following the necessary questions, the court then reaches its decision. It is the special tax advocate, i.e., the Seoul City tax official playing the most important role at the Civil Tax Court, that speaks for the taxpayer who had requested the review based on his expert knowledge. Such an official has proved invaluable in allaying the discontent of people when the decision returned to them has proved unfavorable. Additionally, the fact that they speak for people in economically difficult situations has led to a lessening of the distrust towards the system of taxation.

Describe how and when the initiative was implemented by answering these questions
a. What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The plan for operation of the Civil Tax Court materialized in April 2008 as an improved option for a local tax tribunal ready to serve the people. It was decided that the plan should be developed on the basis of the following four strategies aimed at building people’s trust in the system of taxation and to protect people’s rights. First, the taxpayer asking for review is allowed to be present at the deliberation process to express his view – this is a global first for the implementation of such a policy. It is a strategy aimed to secure the transparency of the deliberation process, ensure the fairness of the decision, and get rid of the distrust towards the system of taxation. Second, the presence of the official at the district office responsible for the imposition of the disputed tax is mandatory for the deliberation process. This is where the official can explain the district office’s position and is presented with the opportunity for self-correction, concerning the imposed tax, should it be necessary. This is part of the city’s efforts to put an end to erroneous imposition of taxes. Third, Seoul City tax officials speak free of charge as special tax advocates at the Civil Tax Court on behalf of people lacking expert knowledge, particularly the less-privileged. This is part of the city’s efforts to protect the rights of its citizens. Fourth, the general public is allowed to be present in the deliberation process as part of the strategy to enhance its tax-related awareness.

b. What were the key development and implementation steps and the chronology? No more than 500 words
The Civil Tax Court was launched as part of an attempt to renew the system concerning the deliberation of tax-related reviews as a result of the proposal made by Yoo Sang-ho, a mid-level manager, in February 2008. It was also an attempt to carry out deliberations in an open session, unlike any system that had preceded it. - A Seoul city tax official, designated as a special tax advocate, is assigned to speak for taxpayers - In March 2008, a Seoul city tax official was designated as a special tax advocate for the Civil Tax Court system. The relevant educational programs were conducted for public employees at district offices, in Seoul, in charge of the imposition of taxes, so as to build a consensus among them. - Composition of teams dedicated to the promotion of the Civil Tax Court system and their effect - In April 2008, the Deliberation and Objection Team Ⅱ (later renamed the Tax Advocate Team) was launched to take charge of Civil Tax Court-related business. This followed an organizational reshuffling of the Tax Division, which led to the integration of the House Evaluation Team and the Building Evaluation Team to form the Real Estate Tax Base Team. As a result, the first Civil Tax Court session was held in April 2008. By November 2009, a total of 20 sessions had been held, returning a total of 1.073 billion won of erroneously imposed taxation to taxpayers. A total of 2,000-plus people, including students, members of civic organizations and public officials, were present at the sessions clearly demonstrating the importance to the general public of a fair and trustworthy system of taxation.

c. What were the main obstacles encountered? How were they overcome? No more than 500 words
- Difficulties due to strong resistance from tax officials - As is currently still the case in Germany and Japan, deliberation of local tax-related reviews used to be carried out in a closed session based on a documentary deliberation in Seoul. Seoul City tax officials were strongly opposed to the proposed change in the system to hold the deliberation process in an open session in which they had to speak for taxpayers against tax assessments made by their colleagues in district offices. They objected on the grounds that such a process simply did not stand to reason and would increase their workload considerably. - Efforts to settle conflicts through persuasion and education with the aim to protect the rights of people - In connection with tax officials’ strong opposition to the proposed changes, efforts were stepped up to persuade them that the changes were in the best interests of the people, were in no way illegal, and were a necessary measure to secure the reliability of the system for tax assessments. Finally, tax officials understood and agreed to comply with the plan. Currently, tax officials in district offices say that they gain an enormous sense of pride when their tax assessments are proved to be correct by the Civil Tax Court. Indeed, many people in and out of the City of Seoul now are now making positive remarks about the system.

d. What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The Civil Tax Court system does not require an additional budget. Outside experts, such as attorneys or tax accountants, are paid for their participation in the court sessions in the same way they were paid for their participation in the sessions of the Local Tax Deliberation Committee. The fact that there was no need to increase the number of officials in the Tax Division holds great significance. They eventually agreed with the purpose of the system and accepted their share of the increased workload based on a shared sense of mission.

Is the initiative sustainable and transferable?
The Civil Tax Court system has been welcomed by both taxpayers and tax officials and does not require an additional budget to operate. Thus, there will be no particular problem in its continued operation. The system will need to be expanded to accommodate the increase in the number of people taking part in its sessions amid people becoming more proactive regarding their tax-related rights. The Civil Tax Court has now secured its position as an example of excellence governance by a local government through the opening of the local tax assessment process and its unique way of defending the position of taxpayers. In the 20 sessions held between April 2008 and November 2009, the Civil Tax Court deliberated on a total of 126 cases. The court ruled in favor of 50 of these cases (40%), and thus, the City of Seoul returned 1.073 billion won of erroneously imposed taxes to taxpayers. As a spirited attempt to renovate the past system of government-oriented operation and protect taxpayers’ rights in a more creative and positive way, the Civil Tax Court is regarded as a good benchmark system by tax-related governmental institutions, such as the Office of the Prime Minister, the Tax Tribunal Office, the National Tax Service, the Korea Customs Service, the Korean Intellectual Property Office, and the Busan Metropolitan Government.

What are the impact of your initiative and the lessons learned?
The Civil Tax Court secures the fairness and objectivity of its decisions by opening to the public the entire process of its deliberations. Although a similar process is carried out in a closed session, in more advanced countries as well as Korea, the City of Seoul made this bold decision to protect the rights of taxpayers and realize the objective of becoming a people-oriented administration. Designation of an incumbent justice as the head of the court has helped enhance the reliability of the process, considerably. Following the launch of the system there have been no complaints concerning a decision made by the court. This may have been due to the measure taken to have a special tax advocate assigned to speak for taxpayers asking for tax-related reviews and allowing taxpayers to express their views in the court. The City of Seoul has received many thank-you letters from people who have gone through this procedure. It appears that the propriety of the tax-related administration has been enhanced, along with the integrity of the tax officials, as the tax officials of the district office responsible for imposing the relevant tax are now made to be present during court sessions. This is verified by the fact that not a single case of tax-related irregularities has been reported since 2008. The success of the initiative is attributable to the fact that the entire deliberation procedure is carried out in an open session, thus enhancing the transparency of the tax assessment process. It has been benchmarked as a good example of an enhanced administrative service as tax officials are made to speak free of charge, as special tax advocates, on behalf of taxpayers lacking expert knowledge, particularly the less-privileged. For its continued growth, the City of Seoul, particularly the tax officials at the district offices, should maintain their firm commitment to the protection of the rights of taxpayers.


Institution Name:		Tax Administration Division, Seoul Metropolitan Government
Institution Type:		Government Department
Contact Person:		Joik Jo
Title:		Head of Team
Telephone/ Fax:		82-2-3707-8612
Institution's / Project's Website:		82-2-731-6956
E-mail:		jojo2k@seoul.go.kr
Address:		Tax Administration Division, Seoul City Hall, 15, Deoksugung-gil
Postal Code:		100-739
City:		Jung-gu
State/Province:		Seoul Metropolitan City
Country:

The Problem

Solution and Key Benefits

Actors and Stakeholders

(a) Strategies

(b) Implementation

(c) Overcoming Obstacles

(d) Use of Resources

Sustainability and Transferability

Lessons Learned

Contact Information