A Tax by Any Other Name: Understanding North Korea’s “Non-tax Burden” System

Photo: iStock, Didrick Stenersen.

Homework is a source of stress for children and parents alike around the world. In North Korea, however, school tasks can be much more strenuous and far less educational. In addition to being mobilized for tasks like garbage hauling and farm work, children are often told to bring in large quantities of specific items, such as scrap metal, manure for fertilizer or rabbit pelts. Other times, teachers require parents to contribute cash for supplies like firewood or computers. However, these “social tasks” (과제, kwaje)” are part of a larger exploitative and opaque system of taxation referred to as “non-tax burdens” that will follow North Korean children into adulthood and the rest of their lives.

Understanding this invisible taxation burden—how it arose, how it has changed under Kim Jong Un, and the toll it takes on citizens—is essential in understanding the relationship between the North Korean regime and its subjects. An analysis of defector testimony, small-scale reporting, and comparisons from China reveal the non-tax burden system as a parasitic structure driven by the regime’s unilateral command economy that places the weight of the state’s economic failings overwhelmingly on the shoulders of ordinary citizens. Kim Jong Un has openly acknowledged the unpopularity of the practice, but this is not a problem that can be fixed with just a few words from the leader. Until North Korea addresses the fundamental weaknesses of its economy, non-tax burdens are here to stay.

The Basics

The phrase “non-tax burdens” (세외부담, sewoe budam) refers to irregular or semi-regular mandatory contributions that citizens must pay to the local government.[1] This generally involves contributing a fixed quantity of a designated resource, money or essential goods. Non-tax burdens are usually levied in response to a seasonal need, in preparation for special dates or holidays, or in support of specific local projects or policies. Notably, non-tax burdens are a universal and well-established practice across the country, but they are not technically part of official state practice and hence lack an established definition. Officially, North Korea abolished taxation in 1974 and celebrates “Tax Abolition Day” every year on April 1.

Non-tax burdens are also closely tied to North Korea’s organizational life.[2] They are generally levied at the local level but carried out organizationally. For example, members of a municipal people’s committee might decide when to levy a non-tax burden and the nature of the tax, but the local heads of neighborhood watch units inminbanjang (인민반장, inminbanjang), school teachers and factory managers will be put in charge of actually collecting contributions and enforcing the policy. The universal and mandatory nature of organizational life offers tax-levying officials an established and easily accessible network capable of reaching every household.

Non-tax burdens are often levied per household in the form of quotas, such as 100 kilograms of scrap metal per household. If households are unable to meet the quotas, authorities often name a cash price households can pay in place of the requested goods. In some more recent cases, residents have suspected authorities of occasionally imposing unreasonable quotas to force people to pay cash instead. There are also examples of the authorities demanding cash outright or a mix of goods and cash.

Pleading inability to pay these non-tax burdens, be it in cash or goods, is not an option, and non-payment is often construed as an ideological failing or even a political crime. In the case of the non-tax burdens levied at the beginning of the new year, for example, progress towards meeting quotas is measured regularly, and individuals who fail to meet their allotted tasks are publicly shamed at regular self-criticism sessions. This public shaming system serves not only to add pressure but also exerts an emotional toll by making individuals feel ashamed or guilty for failing to produce the requested materials.

The Origins and Evolution of Non-tax Burdens

Non-tax revenue is by no means a North Korean invention and has appeared in economies transitioning towards fiscal federalism, including other socialist states like China and Russia.[3] The particular emphasis on contribution in the form of goods and labor, as opposed to hard cash, is directly linked to the nature of the socialist economy. When the state owns all of the means of production and distributes goods to the people, the main “input” in the economy is people’s labor. When local resources are insufficient to produce a necessary good, the state must sell state property (such as goods produced by state-owned enterprises, SOEs) to other nations to purchase items from outside the state economy. For example, North Korea could buy the extra rice needed to cover agricultural shortages or purchase steel for a state construction project by selling domestic resources like timber, coal or SOE-produced items like textiles and wigs.

Put simply, in socialist economies, the government extracts labor from citizens, which can then be converted into goods or cash. By contrast, governments in capitalist economies extract cash, which can later be converted into necessary goods and services. With such miniscule salaries from work at state-owned enterprises, there wouldn’t be much for the North Korean government to take from its citizens if it asked for cash “donations.” With this perspective, it is easy to understand how the North Korean government could “get rid of taxes” for individuals without significant impact on its revenue structure or ability to provide state services.[4] “Non-tax burdens” are simply taxation in a different, more relevant currency: goods (often foraged by citizens) and labor mobilizations beyond the ordinary scope of the workplace.

However, with the rise of local, unofficial markets (장마당, jangmadang) in the 1990s, North Korea saw a sudden influx of resources for the government to tax. Private citizens engaging in trade had access to a greater range of material goods beyond simple foraged items, as well as foreign and domestic hard currency. This came at a time when North Korea’s export revenues were plummeting, and the cost of imports was increasing following the collapse of the Soviet Union and the associated socialist trade sphere in 1991. Naturally, the government began to turn inwards to look for revenue to make up this shortfall, especially once the private economy began to stabilize and thrive in the 2000s.

Non-tax Burdens in the Kim Jong Un Era

Since the 1990s, markets have flourished in North Korea, with some level of market activity becoming state-sanctioned and subject to the equivalent of state and local taxes.[5] Some research, however, suggests that non-tax burdens have also increased in recent years under Kim Jong Un.[6] There are a number of factors at play that likely contribute to this phenomenon, including drops in foreign trade as a result of economic sanctions; Kim’s massive expenditures on large-scale construction of “legacy projects” and military development; a post-marketization growth in extractable wealth among ordinary citizens; and reforms that decentralized the economy and burden-sharing. While the first two are a relatively simple case of decreasing state revenues and ballooning state expenditures, the latter two are related to how the state attempts to bolster revenue and reduce expenditures.

The shift in the state’s burden-sharing, also known as fiscal decentralization, is perhaps one of the clearest links to non-tax burdens. In order to cope with the chasm between state revenue and expenditures, the North Korean state leverages rhetoric about “self-reliance” or Juche to foist a share of costs for state projects onto local governments. One benefit of North Korea’s particular style of governance is that the central government can unilaterally announce a new policy and then leave local governments to handle the execution.

For example, in 2021, the fourth plenary meeting of the Eighth Central Committee announced a grand initiative to build new residences in neglected rural areas. The actual implementation, however, has floundered as the central government concentrated material support for construction in Pyongyang, and rural construction has become dependent on funding and materials from the provincial governments. In North Hamgyong Province, for example, officials were caught taking cost-saving shortcuts to satisfy the state’s policies by remodeling or repairing existing homes and reporting the repaired buildings as “new.”[7] When officials did build new residences in the “model city” of Kimchaek, for instance, the cost of construction was passed along to residents by requiring each household to contribute five kilograms of diesel or gasoline.

A similar pattern appears in the relationship between state and state-owned enterprises. The 2002 7.1 economic reforms and Kim Jong Un’s follow-up policies in 2013 granted greater autonomy to state-owned enterprises so they could (at least theoretically) become self-sufficient and generate enough profit to cover their own operating costs without government subsidy, thereby reducing the financial burden on the central government.[8] However, North Korea’s poor infrastructure, theft, corrupt bookkeeping, and other factors make true profitability and sustainability difficult. Moreover, the government’s ability to impose production quotas without respect for the enterprise’s capacity or actual profitability further complicates the feasibility of the system and can be passed on to residents as non-tax burdens. In one recent example from South Pyongan Province, a government campaign to increase the production of infant foodstuffs led to a 4,000 North Korean won (KPW) tax per household in order to purchase new equipment and increase production.

Case Study: China

In considering the possible structural reasons behind this reliance on non-tax burdens and the potential ramifications, 1980s China offers a well-studied precedent for another socialist economy transitioning towards greater local-level autonomy. During this time, China was also passing off greater responsibilities and burden-sharing to local governments and enterprises without giving local governments the power to impose local taxes independently. Deng and Smyth (2000) posited that this dynamic led local governments to rely heavily on “non-tax levies” (non-tax burdens) in order to make up for budget shortfalls in a way that could not be as easily siphoned off by the central government as formal taxes.[9]

Beyond the ideological and propagandistic value of being able to claim no taxation, the Chinese example suggests there is also likely a political and practical benefit to intentionally obscuring taxation. Changdong Zhang, an associate professor of political science at Peking University, posited that authoritarian regimes are more likely to rely on non-tax burdens and indirect taxation than their democratic counterparts.[10] His argument draws on a fundamental political science argument about the relationship between taxation and representation: the greater the taxation, the greater the people’s demand for representation (voice) in the use of their tax money.

Authoritarian regimes like North Korea use indirect taxation strategies to reduce the public’s ability to perceive and track the amount that they pay in taxes, thereby reducing their demand for commensurate representation. Guangming Jiang, in response to Zhang’s argument, added that the political environment in authoritarian states also likely makes it difficult for citizens to demand representation in return for their tax revenue, but that residents might express this frustration through pressure for greater welfare or provision of public goods in return for their financial contributions.[11] Obscuring the degree of taxation reduces the government’s commitment to the provision of public goods, even as it levies non-tax burdens in the name of public projects.

The Human Cost

If non-tax burdens are not alleviated, there will likely be repercussions for the regime. While a Boston Tea Party-style “no taxation without representation” revolt is highly unlikely in North Korea, residents may look for ways to reduce their burdens by seeking ways to avoid the system that levies the quasi-taxes (organizational life). One manifestation of this phenomenon can be seen in the significant drop in school attendance following the pandemic, even after the most stringent pandemic restrictions on schools were lifted.[12] Assorted school fees and tasks are one of the most onerous elements of the non-tax burden system for families with school-age children.[13] As a result, during the pandemic period, many families pulled their children out of their “free education” in order to save money. Children who remained in school have been increasingly mobilized to directly provide the firewood and other supplies that their parents could not afford. Not only does this infringe on universal rights to education and prohibitions on child labor, but the exhausting nature of mobilizations can be outright dangerous for young children.

Additionally, non-tax burdens are incredibly regressive by nature. Not only is the amount fixed regardless of a household’s ability to pay, but the overlapping nature of organizational life can increase this burden. Taking the example of a typical household, Daily NK journalist Lee Chae Un explained that “the father might pay non-tax burdens to his company, the mother may pay through the inminban, and the child will make contributions to the school they attend. In other words, the different affiliations of each family member may add up to a double or even triple burden per household.”[14]

When it comes to actually paying these quasi-taxes, Lee added, the responsibility within the household is distinctly gendered. Just as women are often the main breadwinners in North Korean households, they are also the ones made responsible for helping their family members meet quotas or for furnishing the cash needed to make up the difference. “With women already devoting enormous energy just to put food on the table, securing the means necessary to pay non-tax burdens is no easy feat,” Lee concluded. “The resulting stress to provide for their families is simply indescribable.” In some cases, the unrelenting nature of the state’s demands and the stress of single-handedly supporting their families have even led some women to take their own lives out of desperation.


The North Korean authorities know that non-tax burdens are wildly unpopular and can cause more harm than good when levied excessively. In the early years after taking power, Kim Jong Un openly mentioned the reduction of non-tax burdens as part of his agenda. He has continued to pay lip service to the issue by issuing a security decree that called for an end to the practice in March 2018 and later calling for an end to the practice again during remarks at the Eighth Party Congress in January 2021. Lessons from 1980s China and other developing nations, however, suggest that the state will not be able to force local governments to stop levying non-tax burdens without first remedying the underlying issue of revenue shortfalls.

A shift to transparent taxation would also be exceedingly difficult since the visibility of taxation introduces a political risk that residents might demand greater welfare in exchange for their taxes. Unless the state effectively reverses its trend towards fiscal decentralization or is suddenly able to generate significantly more income through trade, non-tax burdens seem likely to remain a fixture of the state’s predatory revenue structure.

The government’s strict border closures and restrictions on the private market system have indirectly undermined residents’ ability to make a living, but the unceasing application of non-tax burdens truly demonstrates the callousness with which the state prioritizes its survival above the welfare of the people. To paraphrase a complaint from one resident, “the government has no interest whether the common people starve to death or not. All they do is say ‘give us [money]’ until they’re blue in the face.”[15] While this economic predation may sustain the North Korean government in the short term, levying non-tax burdens without allowing residents to make money on the private market is both cruel and ultimately unsustainable.

Disclaimer: This author works for Unification Media Group and has a professional relationship with Daily NK.

Special thanks to journalist Lee Chae Un for fact-checking and sharing her insight into the psychological toll of non-tax burdens, as well as to Robert Lauler for his assistance during the editing process.

  1. [1]

    Also sometimes referred to as 세대부담 (sedae budam, or “household burdens”) because they are levied per household.

  2. [2]

    “Organizational life” (조직 생활, jojik saenghwal) refers to the requirement that all members of North Korean society belong to one or more state-affiliated organizations: the youth league, women’s league, the trade union, the farmers’ union, or the Party. See Andrea Nikolaevich Lankov, In-ok Kwak and Choong-Bin Cho’s “The Organizational Life,Journal of East Asian Studies 12, no. 2 (2012) for a detailed introduction and analysis. Interestingly, the “Ten Principles,” which made organizational life a permanent fixture of North Korean life (Principle 9), were made official in 1974, the same year that Kim Il Sung also officially abolished taxation.

  3. [3]

    The Chinese case will be discussed in the “Case Study: China” section below. In Russia, these supposedly voluntary non-tax burdens were called “self-taxes” (Самообложение) and were similarly levied on a one-off basis by local governments for specific local projects. The practice began in 1924 under the Soviet Union and is still included as a relatively minor part of modern Russian Federation tax codes. See: “Resident Altruism and Local Public Goods,” Free Network Policy Briefs, April 15, 2019, https://freepolicybriefs.org/tag/voluntary-contributions/.

  4. [4]

    Before Kim Il Sung abolished income tax and individual taxes in North Korea in 1974, Khrushchev made a very similar proposition in 1960. Contemporaneous analysis by Alexander Korovushkin (Chairman of the Board of the State Bank of the Soviet Union) estimated that 91.2 percent of the government’s taxes came from SOEs, collective farms, and cooperatives, demonstrating the relatively small role of individual income taxes under the Soviet socialist economy. See Gerald E. Hoy, “The Abolition of Income Tax in the U.S.S.R.,” Canada Tax Journal 9, no.6 (December 1961): 436-440.

  5. [5]

    These various taxes and fees on market activity have proven to be extremely lucrative for the North Korean government. A 2020 Korea Development Institute study included anecdotal evidence that market-derived revenue made up 10 percent of local government budgets, while a 2018 Beyond Parallel study estimated that the North Korean authorities were collecting a total of 56.8 million dollars a year in taxes and fees from state-sanctioned markets.

  6. [6]

    Changyong Choi and Eulchul Lim, “North Korea’s Tax System and the Relationship Between Citizen and State (북한 세금제도와 국가-주민간 신뢰관계),” KDI School of Public Policy and Management Development Studies Series 9 (2020): 12.

  7. [7]

    Examples of cost-saving shortcuts from other regions include skipping on furnishings, leaving residents to install their own septic tanks, and encouraging households to hire private contractors to fix their homes (which would be reported as a local achievement) by selling construction materials at a subsidized price.

  8. [8]

    The 2002 7.1 guidelines (also known as the July 2002 economic reforms) refer to a bundle of economic reforms that introduced some market elements to the socialist economy, including realistic adjustments to prices and wages and productivity incentives in the form of a “merit system.” These reforms also notably laid the basis for the formalization of legal jangmadang markets, and guidelines for operating government-sanctioned markets were released soon after in May 2003. In 2013, Kim Jong Un built on the 2002 reforms and introduced the “socialist enterprise responsibility management system (SERMS),” which aimed to improve productivity by offering more incentives and greater autonomy to state-owned enterprises to make their own decisions (within the boundaries of state guidance).

  9. [9]

    Xin Deng and Russel Smyth, “Non-Tax Levies in China: Sources, Problems and Suggestions for Reform,” Development Policy Review 18, (2000): 91-411, https://www.fulcrum.org/concern/monographs/6h440v58s.

  10. [10]

    Zhang, Changdong, Governing and Ruling: the Political Logic of Taxation in China (Ann Arbor: University of Michigan Press, 2021).

  11. [11]


  12. [12]

    No national numbers are available, but reports from North Hamgyong Province (Daily NK, Radio Free Asia), Yanggang Province (Daily NK, Radio Free Asia) and Chagang (Jagang) Province (Daily NK) suggest unusual drops in attendance rates. These regions are all located along the border, where the pandemic-caused economic downturn has been especially severe and may not be representative of the country as a whole.

  13. [13]

    Choi and Lim, 22.

  14. [14]

    Private correspondence with Lee in November 2023, translated from the original Korean.

  15. [15]


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