Deputy Prime Minister Choi Sang-mok: "Plan for Local Allocation Tax and Grants to be Prepared This Month" [2024 National Audit]

[Image source=Yonhap News]

Choi Sang-mok, Deputy Prime Minister for Economy and Minister of Strategy and Finance, announced on the 10th that he will "prepare specific measures within this month" regarding the local allocation tax and local education finance allocation fund, which are facing a sharp decline due to tax revenue shortages.

In his opening remarks at the National Assembly held at the Government Complex Sejong on the same day, Deputy Prime Minister Choi stated, "We plan to respond by utilizing all available resources within the government to cover the expected shortfall in national tax revenue this year," adding, "We are consulting with related ministries and local governments on the fund balance situation and ways to minimize the burden on local governments."

It is forecasted that the local allocation tax could decrease by 11 to 12 trillion won next year. The local allocation tax varies according to national tax revenue, which is expected to fall short by 29.6 trillion won compared to the initial estimate of 367.3 trillion won this year. The allocation fund is also likely to decrease by 5.3 trillion won. Even last year, which recorded a historic tax revenue shortfall, 18.6 trillion won of the allocation tax and fund were left unused.

As criticism arose that a reduction in the allocation tax and fund could increase the financial burden on local governments, the Ministry of Strategy and Finance expressed its intention to present related alternatives.

Regarding the tax revenue estimation model, which caused controversy due to large errors alongside the tax revenue shortage, he said, "We will enhance transparency and accountability in the tax revenue estimation process by involving the National Assembly and specialized institutions at every stage."

Meanwhile, Deputy Prime Minister Choi explained, "We will invigorate the economy and strengthen competitiveness," adding, "We will actively promote measures to expand regional tourism, increase livelihood benefits for low-income groups, and reduce the individual consumption tax on old vehicles to stimulate consumption, thereby accelerating domestic demand recovery."

He continued, "We will strengthen tailored support for each stage of corporate growth, including ventures and startups, small and medium-sized enterprises, and mid-sized and large companies to promote corporate growth and enhance industrial competitiveness," and mentioned, "We will promptly implement comprehensive support measures for the semiconductor ecosystem to secure leadership in the global semiconductor competition."

Regarding the livelihood economy sector, Deputy Prime Minister Choi stated, "We will make every effort to stabilize living costs and reduce living expenses." He emphasized, "We will manage prices and supply stably through expanded release and discount support for agricultural and marine products, and continue to improve the distribution structure, including revitalizing online wholesale markets. We will alleviate financial burdens through a three-pronged financial support package and support fixed costs such as rent, electricity, and labor costs. Additionally, through the New Start Fund, which expanded debt adjustment targets from last month, we will actively support the recovery of small business owners."

On the current domestic economic situation, he said, "The recovery trend continues, centered on steady export growth," and added, "The inflation rate, which exceeded 6% at the beginning of the government’s launch, has stabilized downward, entering the 1% range last month."