Opposition-Led Amendment to Local Currency Act Passed in National Assembly Plenary Session
Democratic Party: "Policy for Suffering Commoners and Self-Employed"
People Power Party: "Permanent Law for 250,000 Won Support to All Citizens"
Position of Unacceptability Due to Local Autonomy Damage and Constitutional Violation...
On the 19th, the government expressed its position that it is "difficult to accept the bill" regarding the amendment to the Local Currency Act (Act on the Promotion of Local Love Gift Certificates), which was passed in the National Assembly plenary session led by the opposition party, and stated that it would "recommend a request for reconsideration." The government argues that if administrative and financial support from the government is made mandatory, it would undermine the foundation of local autonomy and infringe upon the government's budgetary authority.
Lee Sang-min, Minister of the Ministry of the Interior and Safety, held a briefing related to the partial amendment of the Act on the Promotion of Local Love Gift Certificates at the Government Seoul Office Building in the afternoon, pointing out problems with the bill and expressing "deep regret as the minister in charge that the bill was unilaterally processed."
Earlier, the National Assembly passed the Local Currency Act, which mandates government administrative and financial support for local love gift certificates. The bill was approved with 166 votes in favor and 3 against out of 169 members present. The ruling party, People Power Party, boycotted the vote in protest against the opposition's unilateral submission of the bill.
On the 19th, the Local Currency Act was passed at the National Assembly plenary session attended by Lee Sang-min, Minister of the Ministry of the Interior and Safety. [Photo by Ministry of the Interior and Safety]
Government and Ruling Party Concerned About the Malicious Law Mandating 'Cash Handouts'... Limited Effect on Stimulating Consumption
Originally, a confrontation between the ruling and opposition parties over the Local Currency Act was anticipated in the National Assembly. Local currency was a flagship project emphasized by Lee Jae-myung during his tenure as a local government head, and the Democratic Party of Korea has promoted it as a party policy, viewing it as a policy for "ordinary citizens and self-employed people suffering from high inflation and high interest rates."
On the other hand, the government and ruling party have taken the stance that it is a "malicious law mandating cash handouts." They criticized the change of government financial support for local currency from voluntary to mandatory, arguing that it infringes on the government's budget authority and contradicts the purpose of local autonomy. Minister Lee also pointed out that "the principle that local governments should bear the expenses of autonomous affairs is being violated."
The government also cites the limited effect on stimulating consumption as a reason for opposition. According to the Ministry of Economy and Finance's data on annual national subsidies for local love gift certificates, support increased from 88.4 billion KRW in 2019 to 1.2522 trillion KRW in 2021, but the impact on the local economy was minimal. The Korea Institute of Public Finance also reported that "if all local governments issue local currency, the effect of revitalizing the local economy may disappear."
Given the current fiscal tightening, it is also a considerable burden on the national budget. The government invested 352.2 billion KRW in issuing local currency nearing 21 trillion KRW last year and allocated 250 billion KRW this year. With tax revenue shortfalls becoming apparent for two consecutive years, mandatory financial support would inevitably increase the burden. According to the fiscal trend report published by the Ministry of Economy and Finance this month, the national budget deficit reached 83.2 trillion KRW as of July this year, marking the third-largest deficit on record as of the end of July. National debt increased by 13.4 trillion KRW in one month, approaching 1,160 trillion KRW.
Minister of the Interior and Safety Lee Sang-min is briefing on the partial amendment to the "Act on the Promotion of Local Love Gift Certificates," which passed the National Assembly plenary session on the 19th, at the Government Seoul Office in Jongno-gu, Seoul. [Photo by Ministry of the Interior and Safety]
Undermining the Foundation of Local Autonomy and Infringing on Government Budget Authority
On the same day, Minister Lee also pointed out that the bill "undermines the foundation of the local autonomy system." Issuance and operation of local love gift certificates are autonomous affairs decided and carried out by local government heads themselves, but the bill mandates that the state must provide administrative and financial support for these autonomous affairs. In other words, it violates the principles of task allocation between the state and autonomous affairs regulated by the Local Autonomy Act and the Local Finance Act, as well as the principle that local governments should bear the expenses of autonomous affairs.
He also argued that the bill infringes on the government's inherent budgetary authority as stipulated by the Constitution. The Constitution requires the National Assembly to obtain the government's consent when increasing the budget or establishing new budget items, but the bill imposes an obligation on the government to provide financial support simply by its enforcement. Minister Lee added, "This infringes on the budgetary authority under the Constitution and has a very high possibility of violating the principle of separation of powers."
He also raised concerns about accelerating the "rich get richer, poor get poorer" phenomenon between special/metropolitan cities and marginalized areas. Minister Lee warned, "If the bill is enforced, local governments with sufficient financial capacity will apply for large budgets, and the government will inevitably provide a lot of national funds to wealthy local governments. If all local governments issue local currency uniformly, capital outflow from marginalized areas will intensify, and the concentration of funds in large cities or central areas will accelerate local extinction."
He emphasized that he would recommend President Yoon Seok-yeol to request reconsideration. The People Power Party also announced that it would recommend the president to exercise the veto power. After a party meeting, floor leader Choo Kyung-ho said, "Since these bills were forcibly passed due to the Democratic Party's unilateral push, including unconstitutional and excessive special investigation bills, we strongly urge the president to exercise the right to request reconsideration (veto)." He added, "From the standing committee stage, the Democratic Party unilaterally pushed through these bills, and even the agenda schedule for the plenary session was unilaterally accepted by the Speaker of the National Assembly because the Democratic Party strongly demanded it, so we could not participate."
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