Korea, North - Politics, government, and taxation

The Korean Workers' Party (KWP) has dominated the North Korean political system since 1948. As a communist party opposed to free enterprise, it controls the economy with little room for private initiative. The state is the country's only economic actor, its only economic planner, and its sole employer. The suppression of any form of political dissent has not allowed opposition parties to advance an alternative economic model.

The constitution, created in 1948 and revised in 1972, 1992, and 1998, calls for a single legislative body called the Supreme People's Assembly, with 687 seats. Though Assembly members are "elected," in fact the KWP supplies a single list of candidates who are elected without opposition. The Assembly members similarly elect the premier, but true executive power lies with the president, Kim Jong Il. There is also a judicial branch whose members are selected by the Supreme People's Assembly.

The state's ideology and autocracy are responsible for North Korea's economic problems. The North Korean economy proved unstable because it relied on outside financing and socialist ideology, rather than private enterprise. In the absence of a viable private sector, the economy was forced to survive on foreign assistance and trade with the Soviet Union. The Soviet collapse in 1991 brought an end to its aid to North Korea. China's ideological "betrayal" of North Korea in establishing ties with South Korea in 1992 also deprived the North of much financial support. The North Korean government has since then found itself unable to solve its economic problems on its own. Despite the massive national deficit, the country spends vast sums of money (estimated at between US$3.7 and US$4.9 billion in 1998) on the armed services, maintaining one of the world's largest armies while requiring international food aid for the survival of its starving population.

Taxes and exports are the main sources of government revenues. In 1996 taxes accounted for 83 percent of revenue and exports for about 9 percent (US$9.4 billion). Additional funds come from the association of pro-P'yongyang Koreans residing in Japan, known as Chongryun, but the exact amount of their contribution is unknown. Income from rights leased to Japanese fishing boats operating in North Korean waters is another source of money. Allegations have been levied against the North Korean government about earning income from counterfeit money, heroin trafficking, and smuggling used cars.

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