Editing Economy of North Korea (section)

===Budget and finance===
[[File:Two koreas gdp 1950 1977.jpg|thumb|upright=1.8|Comparison of the [[GDP per capita]] trends of two Koreas from 1950 to 1977 (in 1990 [[international dollar]]s)]]
[[File:Economic growth of North Korea.jpg|thumb|Historical GDP per capita estimates of North Korea]]
The state budget is a major government instrument in carrying out the country's economic goals.<ref name=loc>{{cite book |last1=Worden |first1=Robert L. |title=North Korea: A Country Study |date=2008 |publisher=Library of Congress |isbn=978-0-16-081422-8 |lccn=2008028547 |oclc=232657089 }}{{pn|date=March 2025}}</ref> Expenditures represented about three-quarters of GNP in the mid-1980s, the allocation of which reflected the priorities assigned to different economic sectors.<ref name=loc/> Taxes were abolished in 1974 as "remnants of an antiquated society". This action, however, was not expected to have any significant effect on state revenue because the overwhelming proportion of government funds—an average of 98.1% during 1961–1970—was from turnover (sales) taxes, deductions from profits paid by state enterprises, and various user fees on machinery and equipment, irrigation facilities, television sets, and water.<ref name=loc/>

In order to provide a certain degree of local autonomy as well as to lessen the financial burden of the central government, a "local budget system" was introduced in 1973. Under this system, provincial authorities are responsible for the operating costs of institutions and enterprises not under direct central government control, such as schools, hospitals, shops, and local consumer goods production. In return, they are expected to organize as many profitable ventures as possible and to turn over profits to the central government.<ref name="Savada1994"/>

Around December of every year, the state budget for the following calendar year is drafted, subject to revision around March. Typically, total revenue exceeds expenditure by a small margin, with the surplus carried over to the following year. The largest share of state expenditures goes to the "people's economy", which averaged 67.3% of total expenditures between 1987 and 1990, followed in magnitude by "socio-cultural", "defense", and "administration".<ref name="Savada1994"/>

Defense spending, as a share of total expenditures, has increased significantly since the 1960s: from 3.7% in 1959 to 19% in 1960, and, after averaging 19.8% between 1961 and 1966, to 30.4% in 1967. After remaining around 30% until 1971, the defense share decreased abruptly to 17% in 1972, and continued to decline throughout the 1980s. Officially, in both 1989 and 1990 the defense share remained at 12%, and for 1991 it was 12.3% with 11.6% planned for 1992. The declining trend was consistent with the government's announced intentions to stimulate economic development and increase the social benefits. However, Western experts have estimated that actual military expenditures are higher than budget figures indicate.<ref name="Savada1994"/>

In the 1999 budget, expenditures for the farming and power sectors were increased by 15% and 11%, respectively, compared with those of 1998.

In the 2007 budget, it was estimated an increase in revenue at 433.2bn won ($3.072bn, $1 = 141 won). In 2006, 5.9% were considered the public revenue, whereas this year, this figure was raised to 7.1%.

North Korea claims that it is the only state in the world that does not levy [[tax]]es. Taxes were abolished beginning on April 1, 1974.<ref>[http://www.uriminzokkiri.com/Newspaper/english/2006/2006-04-08-A1.htm Tax-free land] {{webarchive |url=https://web.archive.org/web/20110716101235/http://www.uriminzokkiri.com/Newspaper/english/2006/2006-04-08-A1.htm |date=July 16, 2011 }}. ''Uriminzokkiri''. April 8, 2006.</ref>