The government and the ruling party are coordinating on the establishment of a 200 trillion won Future Response Fund, which is set to be introduced next year. This comes in response to concerns from local governments about potential reductions in local tax distribution due to the fund's creation. The ruling party plans to incorporate local government feedback into the fund's design and utilization strategies.
On September 29, Democratic Party leader Kim Min-seok, along with party leadership, Lee Kwang-jae, chair of the National Assembly's Special Committee on Budget and Accounts, Kim Young-jin, chair of the Administrative Safety Committee, Minister of the Interior and Safety Yoon Ho-jung, and Minister of Strategy and Finance Park Hong-geun, held a meeting at the National Assembly to discuss the Future Response Fund and the direction of local tax distribution reform.
Kim stated, "A new and unique fiscal environment has been created. We need to consider how to utilize the temporarily increased tax revenue to prepare for fluctuations in revenue and support the country's medium- to long-term investment needs." He added, "We are listening carefully to concerns that the establishment of the fund should not lead to a shortage of local tax revenue or a decline in local financial autonomy, and not all increases in national tax revenue will be allocated to the Future Response Fund."
Minister Yoon noted, "The local tax distribution is designed to increase by 2027 compared to this year, but there is a gap between this and local governments' expectations. I understand that local governments are facing significant financial challenges, especially with the launch of the 9th local government election. However, the Future Response Fund is not solely aimed at central government-led growth policies; it can also serve as a multifaceted policy tool to address key issues such as integrated support for local governments and alleviate their financial difficulties."
Minister Park assured that support for local governments will not diminish, promising to expand investments in fostering regional industrial hubs, improving living conditions, and providing future growth support funds.
The meeting appears to have been convened to alleviate local governments' concerns about potential reductions in local tax distribution due to the establishment of the Future Response Fund. Initially, the government planned to create a 162 trillion won Future Response Fund as part of next year's budget, utilizing additional tax revenue while also adjusting the local tax distribution base.
Local governments have expressed worries that the reduction in local tax distribution, a primary source of their funding, could occur. They had anticipated an increase in local tax distribution due to rising semiconductor tax revenues, but adjustments to the distribution base could lead to a decrease instead.
Park Chan-dae, the mayor of Incheon and chair of the Democratic Party's council of local government leaders, highlighted the dire financial situation of local governments and called for an expansion of resources. He stated, "For local governments to fulfill their roles close to residents, stable funding must be ensured. The local tax distribution rate has remained unchanged for 20 years since 2006. I urge discussions on adjusting the distribution rate in line with the government's national policy direction of fiscal decentralization."
He also emphasized, "The effectiveness of the fund will be maximized when national and local future responses align. I request that the Future Response Fund be robust enough to support local preparations for the future."
On September 29, Democratic Party leader Kim Min-seok, along with party leadership, Lee Kwang-jae, chair of the National Assembly's Special Committee on Budget and Accounts, Kim Young-jin, chair of the Administrative Safety Committee, Minister of the Interior and Safety Yoon Ho-jung, and Minister of Strategy and Finance Park Hong-geun, held a meeting at the National Assembly to discuss the Future Response Fund and the direction of local tax distribution reform.
Kim stated, "A new and unique fiscal environment has been created. We need to consider how to utilize the temporarily increased tax revenue to prepare for fluctuations in revenue and support the country's medium- to long-term investment needs." He added, "We are listening carefully to concerns that the establishment of the fund should not lead to a shortage of local tax revenue or a decline in local financial autonomy, and not all increases in national tax revenue will be allocated to the Future Response Fund."
Minister Yoon noted, "The local tax distribution is designed to increase by 2027 compared to this year, but there is a gap between this and local governments' expectations. I understand that local governments are facing significant financial challenges, especially with the launch of the 9th local government election. However, the Future Response Fund is not solely aimed at central government-led growth policies; it can also serve as a multifaceted policy tool to address key issues such as integrated support for local governments and alleviate their financial difficulties."
Minister Park assured that support for local governments will not diminish, promising to expand investments in fostering regional industrial hubs, improving living conditions, and providing future growth support funds.
The meeting appears to have been convened to alleviate local governments' concerns about potential reductions in local tax distribution due to the establishment of the Future Response Fund. Initially, the government planned to create a 162 trillion won Future Response Fund as part of next year's budget, utilizing additional tax revenue while also adjusting the local tax distribution base.
Local governments have expressed worries that the reduction in local tax distribution, a primary source of their funding, could occur. They had anticipated an increase in local tax distribution due to rising semiconductor tax revenues, but adjustments to the distribution base could lead to a decrease instead.
Park Chan-dae, the mayor of Incheon and chair of the Democratic Party's council of local government leaders, highlighted the dire financial situation of local governments and called for an expansion of resources. He stated, "For local governments to fulfill their roles close to residents, stable funding must be ensured. The local tax distribution rate has remained unchanged for 20 years since 2006. I urge discussions on adjusting the distribution rate in line with the government's national policy direction of fiscal decentralization."
He also emphasized, "The effectiveness of the fund will be maximized when national and local future responses align. I request that the Future Response Fund be robust enough to support local preparations for the future."
* This article has been translated by AI.
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